Chapter 16-Credit In America Flashcards
Paying at a future date for the present use of goods and services or money
Credit
One who lends money or the use of goods and services for payment at a later date
Creditor
A pre-established amount that can be borrowed on demand
Line of credit
Credit whereby you can add purchases up to a set credit limit
Open-ended credit
A loan for a specific amount that must repaid in full, including finance charges, by a stated due date
Close-end credit
Unlicensed lenders who charge illegally
Loan shark
A service to customers that allows that person to charge now and not be billed in several months
Deferred billing
The interest and fees you pay for the use of credit
Finance charges
A charge that allows a person to have work performed and paying later
Service credit
In some states, maximum interest rates are set by
Usury laws
A legal business where loans are made based on the value of merchandise used as collateral
Pawnbroker
Something of value that can be sold to pay a debt
Collateral
The cost of credit expressed as a yearly percentage rate
Annual percentage rate
The free period that allows you to avoid a finance charge if you pay in full before the due date
Grace period
A loan which the goods purchased with the loan serve as
Collareral
Money borrowed against credit card limit
Cash advance
A Manufacturer-related company that makes loans through authorized representatives
Sale finance company
Businesses that offer goods and services directly to consumers and include department stores, drugstores, and clothing stores
Retail stores
Small loan companies that charge higher interest rates and take more risk
Consumer finance company
Most disadvantages of credit can be eliminated by wise use of credit
True
Department stores, drug stores, and finance companies are all examples of retail outlets
False
Interest rates at a credit union are normally higher than at banks
False
Where no usury laws exist, financial institutions may charge whatever rate of interest is agreed upon
True
In an installment purchase agreement, the item you are purchasing will serve as collateral
Trie
Affinity cards charge higher interest rates than regular bank credit cards
False
Credit has helped the American economy grow at a healthy pace
True
The Truth-in-Lending law requires all lenders to calculate APR the same way
True
Handling charges and service charges are other names for service charge
True
Credit cards such as VISA and MasterCard are examples of
Revolving credit agreement
What is an example of service credit
Telephone bill
What is not true about an installment plan
New purchases may be added on
General Motors Acceptance Corporation is an example of
Sales finance company
