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24 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Percent |
one part in every hundred |
1/100 |
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Credit |
The money a bank or other lender is willing to lend you |
Money given to you that's not technically yours |
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Prinicpal of the loan |
The money a bank or other lender is willing to lend you |
The amount |
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Security |
anything of value pledged by the borrower that the lender may sell or keep if the borrower does not repay the loan. |
Things that can be taken for payment |
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Cosigners |
the signature of one or more other persons who guarantee the loan will be repaid |
To get a loan authorized when young or irresponsible |
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Interest |
the money the borrower pays for the use of the lender’s money (based on installment buying) |
Money you pay that accunulates on the amount of money you borrowed |
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Simple interest (formula) |
based on the entire amount of theloan for the total period of the loan. FORMULA: i = p × r × t |
Figuring out interest amount on money borrowed |
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Discount note |
another type of loan for which the interest is paidat the time the borrower receives the loan. |
Instead of accumulating interest over time you calculate entire cost and pay upfront at time of borrowing. |
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Bank discount |
The interest charged in advance before receiving a discount note loan |
Another type of loan where this amount is paid at time of borrow |
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Investment |
the use of money or capital for income or profit which is divided into two classes. |
Using money to save or make more money |
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Fixed investment |
the amount invested as principal is guaranteed and the interest is compounded at a fixed rate. Guaranteed means that the exact amount invested will be paid back together with any accumulated interest. These are “safer”. |
Savings Accounts, Certificates of Deposit, Money Market Accounts. |
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Variable investment |
neither the principal nor interest is guaranteed. This is more risky. |
Examples: Stocks, Mutual Funds, and Bonds. |
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Compound interest (formula) |
- interest that is computed on principal AND interest after interest has been computed at least once. |
The amount in which you pay after adding both initial borrow amount and accumulating interest. |
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Effective Annual Yield (formula) |
T |
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Present Value |
V |
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Annual Percentage Yield (APY)- (formula) |
V |
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Fixed Installment Loan- |
Fixed Installment Loan- one on which you pay a fixed amount of money for a set number of payments. |
Example: Car Payments |
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Open-end Installment loan- |
a loan on which you make variable payments each month. |
Example: Credit Cards |
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APR (formula) |
The true rate of interest charged for the loan. |
The cost it increases by |
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Finance Charge (refer to table) |
The total amount of money charged for borrowing the money. |
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Total Installment Price- |
the sum of all the monthly payments and the down payment, if any |
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Unearned Interest |
If you decide to pay your loan off quicker than your term, the amount of reduction of your total payment |
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Unpaid Balance Method |
the borrower is charged interest or a finance charge on the unpaid balance from the previous charge period. |
Credit card bill |
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Average Daily Balance method (formula) |
use the average daily balance method of calculating the finance charge because they believe that is fairer to the customers |
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