History

Question 1

What is Annual percentage rate

Answer 1

cost of credit expressed as a yearly percentage

Question 2

What do you have to pay when you borrow?

Answer 2

Principal and interest rate

Question 3

What are the five types of the basic lending institutions in our economy?

Answer 3

Commercial banks, savings and Loan Associations, savings banks, credit unions and finance companies

Question 4

What are some of the most common types of credit cards used today?

Answer 4

Revolving, regular charge, instalment charge

Question 5

When you take out a loan, what do you call the total cost of credit expressed as dollars and cents?

Answer 5

Finance charge

Question 6

When you apply for a loan, what are the four factors a creditor analyzes to determine your creditworthiness?

Answer 6

Capacity : how much money and assets you have
Capital: money/cash
Collateral: assets
Character: responsibility and paying on time

Question 7

What are your responsibilities as a borrower?

Answer 7

making timely payments
monitoring your debt/credit
understanding loan terms
borrowing within your means
communicating with lenders if there is an issue

Question 8

What does the Equal Credit Opportunity Act of 1974 prohibit?

Answer 8

The Equal Credit Opportunity Act (ECOA) of 1974 prohibits discrimination in lending based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.

Question 9

What are three important federal laws regulating consumer credit?

Answer 9

The Truth in Lending Act, which guarantees that consumers are aware of the costs and conditions of borrowing.
The Equal Credit Opportunity Act, which outlaws discrimination in granting credit based on gender, race, marital status, and other factors.
The Fair Credit Reporting Act, which helps protect privacy and ensure accuracy in credit checks.