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Banking and Financial Institutions > Topic 8: Consumer Loan, Credit Cards, Real Estate Lending > Flashcards

Topic 8: Consumer Loan, Credit Cards, Real Estate Lending Flashcards

1
Q

is a loan given to consumers to finance specific types of expenditures. In other words, a consumer loan is any type of loan made to a consumer by a creditor

A

Consumer Loan

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2
Q

What are the common types of consumer loans that are offered by banks?

A
  • Auto loans
  • Motorcycle loans
  • Home loans
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3
Q

is the process of providing financing to individuals or families on consumable items such as a car, house, or furniture

A

Consumer Lending

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4
Q
  • are loans that are backed by collateral
  • generally grant the borrower greater amounts of financing, a longer repayment period, and a lower charged interest rate
A

Secured Consumer Loans

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5
Q
  • are loans that are not backed by collateral
  • generally grant the borrower a limited amount of financing, a shorter repayment period, and a higher charged interest rate
  • are supported by the borrower’s creditworthiness
A

Unsecured Consumer Loans

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6
Q
  • Short-term to medium-term loans that are repayable in two or more consecutive payments
  • borrowers must
    repay with regularly scheduled payments or
    installments
A

Installment Loans

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7
Q

Installment loans are used for

A
  • automobiles
  • recreational vehicles
  • furniture and home appliances
  • consolidate existing household debts
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8
Q

What is the advantage of Installment Loans?

A

includes flexible terms and lower interest rate

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9
Q

What is the disadvantage of Installment Loans?

A

includes the risk of default and loss of collateral

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10
Q
  • refer to a system of credit that is payable in one lump-sum amount by a specified date
  • are short-term loans are drawn upon by individuals and families for immediate cash needs
A

Non-Installment Loans

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11
Q

Non-installment Loans are used for

A
  • cover the cost of medical care
  • purchase of home appliances, and auto and home repairs
  • single-payment loans by financial institutions
  • service credit extended by utility companies
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12
Q

a loan that is provided by a mortgage lender or a bank, which enables an individual to purchase a home or property

A

Mortgages

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13
Q

a type of loan where the money you spend is borrowed from the card provider rather than taken from your bank account

A

Credit Cards

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14
Q

used by consumers to finance education

A

Student Loans

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15
Q

typically offer flexibility, but costs can vary based on your credit history and the lender you choose.

A

Personal Loans

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16
Q

a type of loan that gives you access to a set amount of money

A

Revolving Credit

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17
Q
  • assigns the borrower a specific credit limit

- limit is based on the client’s credit score, income, and credit history

A

Revolving Credit

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18
Q

refers to an open-ended credit account—like a credit card or other
“line of credit”—that can be used and paid down repeatedly as long as the account remains open

A

Revolving Credit

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19
Q
  • As soon as the debt is repaid, the user can borrow up to her credit limit again without going through another loan approval process
  • If you have failed to pay your debt by the due date, you may be subjected to interest or any charges
A

Revolving Credit

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20
Q

What are the two types of Revolving Credit

A

Credit Cards and Home Equity Line of Credit

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21
Q

an open-ended credit account that lets you borrow money against the value of your home

A

Home Equity Line of Credit

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22
Q
  • it works like a credit card but uses the home as collateral
  • you canborrow and repay the money multiple times as long as you don’t exceed the credit limit
A

Home Equity Line of Credit

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23
Q

pay off the purchase price gradually incurring a monthly finance charge based on an annual interest rate

A

Installment

24
Q

pay off the charge in one billing period escaping any finance charge

A

Non-Installment

25
Q

standard credit cards that are used to charge purchases

A

Traditional Cards

26
Q
  • benefit consumers that purchase gasoline regularly
A

Gas Cards

27
Q
  • closed-loop or open-loop

- offer merchandise discounts

A

Retail Cards

28
Q

to earn cash back or points for the purchases made

A

Rewards Cards

29
Q
  • higher than rewards card

- rewards to be earned are much more extravagant

A

Premium Rewards Cards

30
Q

consolidate credit card debt

A

Balance Transfer Cards

31
Q
  • similar to balance transfer cards

- low-interest rates as a form of incentive

A

Low Interest Cards

32
Q
  • secured by assets to protect card issuers

- most often for those who have no credit history or did not qualify for a traditional credit card

A

Secured Cards

33
Q

the one who applied to the bank

A

Principal Card Holder

34
Q

an authorized user that has permission from the principal card holder

A

Supplementary Card Holder

35
Q

a detailed document that summarizes all the transactions made by the card holder in a given period of time

A

Statement of Account

36
Q

the date of purchase

A

Transaction Date

37
Q

the date on which the transaction is received into the account

A

Post Date

38
Q

According to Uniform Bank Performance Report (UBPR): these loans are domestic - office loans secured by real estate

A

Real Estate Loans

39
Q

Classified separately from commercial and consumer loans because the collateral is in the form of real property and the loans are subject to different risks and regulations

A

Real Estate Loans

40
Q

consisting of construction and real estate development, land development, and commercial properties loans

A

Short-Term Interim Loans

41
Q

provide financing only for a limited time until permanent financing is arranged eg. long-term mortgage or direct financing from insurance companies or pension funds

A

Interim Loans

42
Q

bank extends credit to a builder to pay for the materials and labor necessary to complete a project

A

Construction Loan

43
Q
  • irregular basis
  • completion of certain phases of the construction process
  • actual supplier and subcontractor bills presented to the banker
A

Repayment of Construction Loan

44
Q

finance the construction of roads and public utilities in areas where developers plan to build houses

A

Land Development Loan

45
Q

when homeowners buy the houses and lots

A

Repayment of Land Loan Development

46
Q

written guarantee by a lender to provide permanent financing for a commercial property once an interim loan or construction loan comes due

A

Takeout Commitment

47
Q

What are the two types of Residential Mortgage Loans or Home Loans?

A

Conventional and Flexible

48
Q

What are the characteristics of Residential Mortgage Loans or Home Loans?

A
  • long-term financing option
  • can be utilized for the purchase of a vacant lot, a house and lot, a townhouse unit, an apartment, or a condominium unit
    0 financing of the construction or renovation of a home
    0 can also be used to refinance existing home loans or to reimburse acquisition costs
49
Q
  • legal document through which a borrower gives a lender a lien on real property as collateral against the debt
  • borrower gets to use a property as long as the scheduled interest and principal payments are met. If the borrower defaults, the lender can exercise the lien and claim the property
A

Mortgage

50
Q

allows borrowers to make fixed payments for a specified period of time. In the Philippines, this can commonly last for up to 20 years and for a minimum of Php500,000

A

Conventional Home Loan

51
Q

connected to an existing banking account, with the account owner is able to affect the interest rate charged by way of depositing payments and/or beginning principal repayment at any time

A

Flexible Home Loan

52
Q

What is the eligibility of age in loan?

A

minimum of 20 maximum of 65 years old

53
Q

What is the eligibility of employment in loan?

A

employed for at least 2 years, self-employed and business owners: taxes, income, and/or profits, as well as business permits and other related documents, are required for approval

54
Q

What is the eligibility of income in loan?

A

earning a specified amount each month to best ensure capacity to pay

55
Q

What is the eligibility of citizenship in loan?

A

Filipino citizens are all eligible to borrow home loans from banks in the Philippines. Foreign applicants, or Filipinos who are no longer citizens of the country, would have to consider banks that lend to an international clientele

56
Q

What is the risk interest rate?

A

because of longstanding of 30 years max potential loss if rates increase

57
Q

To avoid the risk interest rate, what do banks provide?

A
  • periodic adjustments in the interest rate
  • adjustments in periodic principal payments
  • the lender sharing in any price appreciation of the underlying asset at the sale
  • most banks tend to offer a fixed interest rate in at least the first year, with the following years subject to re-pricing

Banking and Financial Institutions (7 decks)

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