Flashcards
Chapter 14
Cards in this deck (17)
- 1AmortizationProcess of paying back a loan (principal plus interest) by equal periodic payments.
- 2Amount FinancedCash price less down payment.
- 3Annual Percentage Rate (APR)True or effective annual interest rate charged by sellers. Required to be stated by Truth in Lending Act.
- 4Average Daily BalanceSum of daily balances divided by number of days in billing cycle.
- 5Cash AdvanceMoney borrowed by holder of credit card. It is recorded as another purchase and is used in the calculation of the average daily balance.
- 6Credit Card ActA federal statue passed in 2009 to provide fair and transparent practices to the extension of credit.
- 7Daily BalanceCalculated to determine customer's finance charge: Previous Balance + Any Cash Advantage + Purches - Payments
- 8Deferred Payment PriceTotal of all monthly payments plus down payment.
- 9Down PaymentAmount of initial cash payment made when item is purchased.
- 10Fair Credit and Charge Card Disclosure Act of 1988Act that tightens controls on credit and companies soliciting new business.
- 11Finance ChargeTotal Payments - Actual Loan Cost
- 12Installment LoanLoan paid off with a series of equal periodic payments.
- 13Loan Amortization TableTable used to calculate monthly payments.
- 14Open-End CreditSet payment period. Also, additional credit amounts can be added up to a set limit. It is a revolving charge account.
- 15Outstanding BalanceAmount left to be paid on a loan.
- 16Revolving Charge AmountCharges for a customer are allowed up to a specific maximum, a minimum monthly payment is required, and interest is charged on balance outstanding.
- 17Truth in Lending ActFederal law that requires sellers to inform buyers, in writing, of (1) the finance charge and (2) the annual percentage rate. The law does not dictate what can be charged.