Personal Finance and Credit Management: Loan Considerations and Borrowing Fundamentals

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Finance - Personal Finance

michael1tekrzp Created by 10 mon ago

Cards in this deck(45)

Before taking out a loan, consider if it is necessary by asking: Could you save money instead of borrowing? Do the monthly payments fit in your budget? Is it worth the added interest? These are _____ things to consider.

To calculate net worth, subtract liabilities from assets. This is expressed as: _____ - liabilities.

Credit is an arrangement where you get stuff now and agree to pay for it later. This is often referred to as _____ now, pay later.

A mortgage is a type of loan used to buy property and is a secured loan, meaning it requires _____ as collateral.

A loan is a type of borrowing where you receive money for a certain amount of time with _____ charged.

An overdraft occurs when you spend more money than you have in your account, resulting in owing the bank, which may charge you _____ or fees.

Credit cards are funded by the bank name on the back and have a credit limit until you completely pay it back. This describes the _____ of credit cards.

A revolving credit card agreement offers a choice of paying in full each month or making payments over time. It is typically used for _____ purchases.

Non-installment loans are short-term loans for immediate cash needs, with the money due in _____ on a specific date.

Installment loans require monthly payments until the principal and interest are paid back in full, making them suitable for _____ purchases.

The principal is the amount of money you _____.

The term of a loan refers to the amount of _____ you're borrowing for.

A disadvantage of an unsecured loan is the high risk the lender might not be paid back since there's nothing up for _____ as collateral.

A disadvantage of a secured loan is that you have to put something up for value that will be taken if you don't _____ the loan.

Examples of collateral include house, car, stocks, bonds, jewelry, art, and _____.

A cosigner is someone other than the borrower who agrees to sign the loan document and repay the loan if the original borrower stops making _____.

Taking a variable rate loan means you take on the risk that your interest rates may go up since your lender can change your rate at any _____.

A variable rate is an interest rate that goes up and down with inflation and other economic _____.

A fixed rate is an interest rate that does not _____ over time.

The outstanding balance is the amount you still owe after your most recent _____ has been made.

A deadbeat is someone who pays off their credit card bill on time every month, avoiding _____ and interest.

An annual fee is a yearly fee for having the card, although not many credit cards have an _____ fee.

APR stands for annual percentage rate, which is also known as the _____ rate.

Penalty fees and rates may include a late payment fee if the bill isn't paid on time, and the bank may increase your interest rate to a _____ interest rate which is higher.

The grace period is the time period between when you receive the bill and the due date, during which no _____ charges will be added to your account.

The amount of interest you pay decreases every month because the balance you owe decreases, leading to a lower _____ fee.

Over time, the monthly interest principal paid increases since the portion of the monthly payment going to interest decreases, leaving more to pay down the _____ balance.

Interest is calculated using the formula: principle x rate x _____.

Payday loans are considered predatory due to high interest rates and the fact that they don't use _____.

If you can't pay off a payday loan, ask the lender if they will accept less than the full amount rather than sending it to _____.

The four main sections of your credit report include personal information, credit history, public records, and credit _____.

A credit report is a detailed report of an individual's credit history and track record of paying bills over the past _____ years.

The information on your credit report is used to calculate your credit _____.

Regularly checking your credit report is important because there could be errors that need fixing or identity theft used for loans or credit _____.

The scale for credit scores ranges from _____ to 850.

The five parts of your credit score include payment history, amounts owed, length of credit history, types of credit, and new _____.

Credit utilization is the amount of credit you're using compared to the total amount available. A _____ utilization is better.

The big three credit reporting companies are Equifax, Experian, and _____.

Actions that can sabotage your credit score include late payments, closing credit cards, high credit utilization, and opening cards you don't _____.

To calculate credit utilization, find your total debt, find your total credit limit, divide the total debt by the total credit limit, and multiply by 100 to get a _____.

The snowball method involves organizing debt by lowest to highest and paying the smallest debt first, then using extra cash to pay the _____ balance.

The high rate method involves paying off loans with the highest interest rates first, using extra cash to pay the one with the highest _____.

Bankruptcy is a legal process to get out of debt when you can no longer make all your required _____.

Ways to get out of debt faster include paying more than the minimum payment, using the snowball or high rate method, and picking up a side _____.

Paying for college can involve loans, which need to be paid back, and grants or scholarships, which are considered _____ money.

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