37756854
Description
Flashcards by McKenzie Layton, updated more than 1 year ago
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Created by McKenzie Layton
over 1 year ago
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| Question | Answer |
| Down Payment | Amount of initial cash payment made when item is purchased, 377. |
| Installment Loan | Loan paid off with a series of equal periodic payments, 378. |
| Amortization | Process of paying back a loan (principal plus interest) by equal periodic payments, 378. |
| Amount financed | Cash price less down payment, 378. |
| Deferred payment price | Total of all monthly payments plus down payment, 378. |
| Truth in Lending Act | Federal law that requires sellers to inform buyers, in writing, of (1) the finance charge and (2) the annual percentage rate. The law doesn’t dictate what can be charged, 378–379. |
| Annual percentage rate (APR) | True or effective annual interest rate charged by sellers. Required to be stated by Truth in Lending Act, 379–382. |
| Loan amortization table | Table used to calculate monthly payments, 380, 383. |
| Fair Credit and Charge Card Disclosure Act of 1988 | Act that tightens controls on credit card companies soliciting new business, 384. |
| Revolving charge account | Charges for a customer are allowed up to a specified maximum, a minimum monthly payment is required, and interest is charged on balance outstanding, 385–387. |
| Open-end credit | Set payment period. Also, additional credit amounts can be added up to a set limit. It is a revolving charge account, 377, 385. |
| Outstanding balance | Amount left to be paid on a loan, 385. |
| Average daily balance | Sum of daily balances divided by number of days in billing cycle, 386–387. |
| Cash advance | Money borrowed by holder of credit card. It is recorded as another purchase and is used in the calculation of the average daily balance, 386. |
| Daily balance | Calculated to determine customer’s finance charge: Previous balance + Any cash advances + Purchases − Payments, 386–387. |
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