Law I Credit Basics

A creditor

• is a person who provides credit, loans, money, or delivers goods or services before payment is made

• a person who owes money or buys on credit

• is a person who reposesses items when an individual fails to pay back their due credit

• must be a licensed financial institution, such as a bank

A debtor

• is a person who provides credit, loans, money, or delivers goods or services before payment is made

• a person who owes money or buys on credit

• is a person who reposesses items when an individual fails to pay back their due credit

• must be a licensed financial institution, such as a bank

A finance charge

• is additional money owed to a creditor in exchange for the privilege of borrowing money, including fees and interest

• is money paid for the use of someone else's money, usually as a set percentage of the credit given

• is credit based only on a promise to repay in the future

• is credit for which the consumer must put up some kind of property as protection in the event a debt is not repaid

Interest

• is additional money owed to a creditor in exchange for the privilege of borrowing money, including fees

• is money paid for the use of someone else's money, usually as a set percentage of the credit given; the main cost of borrowing money

• is credit based only on a promise to repay in the future

• is credit for which the consumer must put up some kind of property as protection in the event a debt is not repaid

Unsecured credit

• is money or property given as security in case a person is unable to repay a debt

• is the interest rate paid per year on borrowed money

• is credit based only on a promise to repay in the future

• is credit for which the consumer must put up some kind of property as protection in the event a debt is not repaid

Secured credit

• is money or property given as security in case a person is unable to repay a debt

• is the interest rate paid per year on borrowed money

• is credit based only on a promise to repay in the future

• is credit for which the consumer must put up some kind of property as protection in the event a debt is not repaid

Collateral

• is money or property given as security in case a person is unable to repay a debt

• refers to the failure to fulfill a legal obligation, such as making a loan payment or appearig in court on a specified date and time

• is credit based only on a promise to repay in the future

• is credit for which the consumer must put up some kind of property as protection in the event a debt is not repaid

A default

• is money or property given as security in case a person is unable to repay a debt

• refers to the failure to fulfill a legal obligation, such as making a loan payment or appearig in court on a specified date and time

• is credit based only on a promise to repay in the future

• is credit for which the consumer must put up some kind of property as protection in the event a debt is not repaid

Annual Percentage rate

• is interest charged for credit at a rate that changes slightly from time to time, going up or down within certain limits depending on changes in the economy

• is the interest rate paid per year on borrowed money

• is the legal limit in a given state for interest to be charged on certain types of credit. Any interest rates above this rate are illegal

• is credit for which the consumer must put up some kind of property as protection in the event a debt is not repaid

Usury

• is interest charged for credit at a rate that changes slightly from time to time, going up or down within certain limits depending on changes in the economy

• is the interest rate paid per year on borrowed money

• is the unlawful act of charging interest for various types of credit at rates higher than the state's legal limit

• is credit for which the consumer must put up some kind of property as protection in the event a debt is not repaid