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Definition
| a federal law that requires creditors to disclose the annual percentage rate (APR) and the finance charge as a dollar amount Does NOT set rates or tell creditor how to make interest calculations |
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Definition
| interest computed ONLY on the principal, WITHOUT compounding I=prT (interest = principal x rate of interest x time) |
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Term
| Average daily balance method |
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Definition
| a method of computing finance charges that uses a weighted average of the account balance throughout the current billing period |
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Definition
| the total dollar amount paid to use credit |
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Definition
| a method of computing interest when more than one payment is made on a simple interest loan |
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Term
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Definition
| a mathematical formula to determine how much interest has been paid at any point in a loan term (AKA “the sum of the digits”) favors the lender. o Add up all the digits for the number of payments scheduled |
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Term
| Annual percentage rate (APR) |
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Definition
| the percentage cost (or relative cost) of credit on a yearly basis. The APR yields a true rate of interest for comparison with other sources of credit |
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Term
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Definition
| a method of computing interest in which interest is calculated on the full amount of the original principal |
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Term
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| any type of insurance that ensures repayment of a loan in the event that the borrower is unable to repay it like death, disability, or loss of property |
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Definition
| the assessment of finance charges after payments made during the billing period have been subtracted |
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Definition
| one type of personal (or straight) bankruptcy in which many debts are forgiven |
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Definition
| pledge property or something as collateral to get a lower interest rate |
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Definition
| a method of computing finance charges that gives no credit for payments made during the billing period |
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Term
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Definition
| a voluntary plan that a debtor with regular income develops and proposes to a bankruptcy court |
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