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15 Cards in this Set

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  • Back
truth in lending law
a federal law that requires creditors to disclose the annual percentage rate (APR) and the finance charge as a dollar amount
finance charge
the total dollar amount paid to use credit
annual percentage rate (APR)
the percentage cost (or relative cost) of credit on a yearly basis. the APR yields a true rate of interest for comparisons with other sources of credit
simple interest
interest computed on principal only and without compounding
declining balance method
a method of computing interest when more than one payment is made on a simple interest loan
add-on interest method
a method of computing interest in which interest is calculated on the full amount of the original principal
adjusted balance method
the assessment of finance charges after payments made during the billing period have been subtracted
previous balance method
a method of computing finance charges that gives no credit for payments made during the billing period
average daily balance method
a method of computing finance charges that uses a weighted average of the account balance throughout the current billing period
rule of 78s
a mathematical formula to determine how much interest has been paid at any point in a loan term
credit insurance
any type of insurance that ensures repayment of a loan in the even the borrower is unable to repay it
fair debt collection practices act (FDCPA)
a federal law, enacted in 1978, that regulates debt collection activities
consumer credit counseling service (CCCS)
a lcal, nonprofit organization that provides debt counseling services for families and individuals with serious financial problems
chapter 7 bankruptcy
one type of personal (or straight) bankruptcy in which many debts are forgiven
chapter 13 bankruptcy
a voluntary plan that a debtor with regular income develops and proposes to a bankrupty court