It is the cost of a loan expressed as a percentage of the amount borrowed
What is Collateral?
Something of value that helps you get a loan (down payment, jewelry)
What is another word for Credit?
Borrowing; loan
Consumer Credit Counseling Services helps people with what?
Managing their debt and budgets; for a fee they will help negotiate with your lenders.
What is revolving credit, and give an example?
Credit that you can keep using as long as you are below your credit limit; credit cards
What do you call loans that have very high fees and interest; the elderly and people with poor credit are usually the victims.
Predatory lending
What is the illegal practice of denying a loan based on where someone lives?
Redlining
What are 4 high cost lenders? Which is the highest cost lender?
Pawn shop loan, car title loan, payday loan, consumer finance company. Pawn shop loans are the highest cost.
What is the Minimum Payment on your credit card bill?
It is the smallest amount you can pay without getting an extra finance charge.
What are 4 things you should do to help avoid identity theft?
Never give personal information over the phone when someone calls you; call to cancel credit cards; cut up credit cards; put pieces in different trash cans.
If you only pay the minimum payment on your credit card bill, what happens?
It will take you 10 years to pay off the bill AND you will pay A LOT of interest.
What is your credit score?
A number (300-850) that tells lenders how responsible a borrower you are
What is a secured loan? Give an example.
A loan that requires collateral. Pawn shop loan, car title loan, mortgage.
What is Installment credit and give an example?
A loan you pay off in a fixed number of payments; car loan, mortgage or student loan.
Do people with low credit scores pay higher or lower interest rates on loans?
Higher interest rates
What is a credit limit?
The maximum you can borrow.
What is an Unsecured Loan? Give an example.
A loan that does NOT require collateral. Credit cards, student loans.
If a credit card payment is not received by the due date, what happens?
You car charged a late payment fee (finance charge)
What is the APR or Annual Percentage Rate?
It is the true cost of a loan; includes interest AND fees.
What is the COST of borrowing or the cost of credit?
Interest and finance charges (late fees)
If you want a good credit score, what should you do?
Pay bills on time and pay the full amount; limit your borrowing to 20% of your annual income;
Is a finance charge in dollars or a percent?
Dollars
What law requires lenders to tell you the APR or Annual Percentage Rate on a loan?
Truth in Lending Act
If you are denied a loan, you can get a free copy of your credit report within how many days?
60
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