Consumer Credit Vocabulary

Front

What is a layaway plan?

Back

A layaway plan is a purchasing method where a customer pays for merchandise in installments, but does not receive the item until it is fully paid for. The item is held in the store for a fee.

Front

What does earning power refer to?

Back

Earning power refers to a person's ability to earn money now and in the future.

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What is a payday loan?

Back

A payday loan is a small, short-term loan that is typically due on the borrower's next payday. It is an unsecured loan.

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What does APR stand for?

Back

APR stands for Annual Percentage Rate, which is the interest rate paid or charged per year.

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What is credit?

Back

Credit is the ability to purchase something without paying for it at the time of the transaction.

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What is a credit rating?

Back

A credit rating is an assessment of the creditworthiness of a borrower, indicating the likelihood of default.

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What is a credit score?

Back

A credit score is a numerical representation of a person's creditworthiness, based on their credit history.

Front

What is a finance charge?

Back

A finance charge is the cost of borrowing money, including interest and any additional fees.

Front

What is collateral?

Back

Collateral is an asset that a borrower offers to a lender to secure a loan, which can be seized if the loan is not repaid.

Front

What is a promissory note?

Back

A promissory note is a written promise to pay a specified amount of money to a specified person at a specified time.