Loan and Credit Flashcard

Front

What is the term used to describe the amount of money still owed on a loan before any additional fees or interest are applied?

Back

Principal

Front

What does APR stand for in the context of loans and credit?

Back

Annual Percentage Rate

Front

What is the impact on your credit card balance when a late fee is charged?

Back

Interest is added to the principal along with a late fee.

Front

What is the term for an item that can be used to secure a loan in case of non-payment?

Back

Collateral

Front

What is the total amount of money charged in addition to the original loan amount called?

Back

Interest

Front

How can you improve your debt-to-income ratio when you have multiple credit cards?

Back

Pay off a card with the highest balance and keep it open.

Front

What is the difference between secured and unsecured loans?

Back

Secured loans are backed by collateral, while unsecured loans are not.

Front

What is a credit limit?

Back

The maximum amount of credit that a lender extends to a borrower.

Front

What is the purpose of a credit score?

Back

To assess a borrower's creditworthiness.

Front

What does it mean to default on a loan?

Back

To fail to repay the loan according to the agreed terms.