Chapter 5 Flashcards
Amount you are borrowing
Principle
Percentage (usually per year) charged to borrow
Interest
The amount of time of investment, agreement, ect.
Term
Requires collateral - lender can take it if you don’t pay, safer for the lender and offers lower interest rate.
Secured
used to finance a specific amount of time. Regular payment made to payments are made to pay the interest and the principle.
Installment loans
an open line of credit that can be used for any purchases as long as you’re under the credit limit.
Revolving credit
debt is tied to a specific asset that can be used as collateral and repossessed if the borrower doesn’t make payments.
Secured debt
interest rate can change during the duration of the loan based on the prime rate or an index rate.
Variable- Rate
debt is not tied to a specific asset; there is no collateral that can be repossessed if borrower defaults.
Unsecured Debt
interest rate remains constant during the duration of the loan.
Fixed - Rate
Amount of money you can borrow to pay back later.
Line of Credit
The amount you still owe after have made your most recent payment.
Outstanding balance
Federal student loans will default to the standard plan, Which has a term of ____ years
10
initial payment made to the creditor that lowers your total debt
Down payment
what is the typical grace period for a credit card in days
20 - 30
