Loan Terminology Flashcard

Front

What is the original amount borrowed in a loan called?

Back

Principal

Front

What term describes the percentage charged for borrowing money?

Back

Interest Rate

Front

Which term refers to the cost of borrowing money?

Back

Interest

Front

Which factor determines the cost of borrowing money?

Back

Interest Rate

Front

How is simple interest calculated?

Back

Annually on the amount you deposit or owe

Front

What does the variable r represent in the simple interest formula?

Back

Interest rate

Front

In the simple interest formula, what does 'P' stand for?

Back

Principal amount

Front

What does APR stand for in financial terms?

Back

Annual Percentage Rate

Front

What is the process of gradual loan repayment through scheduled payments called?

Back

Amortization

Front

What is the main purpose of amortization in loans?

Back

To gradually repay the loan