CRM UNIT 4 VOCABULARY

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What is collateral?

Back

Collateral is an asset that a borrower offers to a lender to secure a loan. If the borrower fails to repay the loan, the lender can take possession of the collateral.

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What is net income?

Back

Net income is the amount of money you receive after all deductions (like taxes and other withholdings) are subtracted from your gross income.

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How does a great credit score affect loan terms?

Back

A great credit score typically results in a lower Annual Percentage Rate (APR) on loans, making borrowing cheaper.

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Who is a lender?

Back

A lender is a person or institution that loans money to individuals or businesses.

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What is a budget?

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A budget is a plan for spending and saving money, outlining expected income and expenses over a specific period.

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What is principal in the context of loans?

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Principal is the original sum of money borrowed in a loan or the amount still owed on which interest is calculated.

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What is interest?

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Interest is the cost of borrowing money, usually expressed as a percentage of the principal, paid to the lender.

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What is a loan?

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A loan is a sum of money that is borrowed and is expected to be paid back with interest.

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What does APR stand for?

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APR stands for Annual Percentage Rate, which is the annual rate charged for borrowing or earned through an investment.

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What is gross income?

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Gross income is the total income earned before any deductions, such as taxes or retirement contributions.