Financial Algebra CONSUMER CREDIT

Front

What is Consumer Credit?

Back

Consumer credit is the use of credit to purchase goods and services, allowing consumers to buy now and pay later.

Front

What does APR stand for?

Back

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

Front

How do you calculate monthly payments on a loan?

Back

Monthly payments can be calculated using the formula: M = P[r(1 + r)^n] / [(1 + r)^n – 1], where M is the total monthly payment, P is the loan amount, r is the monthly interest rate, and n is the number of payments.

Front

What is the formula for calculating average daily balance?

Back

Average Daily Balance = (Sum of daily balances) / (Number of days in billing cycle).

Front

What is available credit?

Back

Available credit is the amount of credit that a borrower has left to use on their credit card after accounting for any outstanding balances.

Front

How do you determine the total of all purchases made in a billing cycle?

Back

The total of all purchases is calculated by summing up all transactions made during the billing cycle.

Front

What is the significance of finance charges on a credit card?

Back

Finance charges are fees for borrowing on a credit card, typically calculated based on the average daily balance and the APR.

Front

What factors influence the length of a loan?

Back

The length of a loan is influenced by the loan amount, interest rate, and the borrower's ability to make monthly payments.

Front

What is the difference between secured and unsecured credit?

Back

Secured credit is backed by collateral, while unsecured credit is not backed by any asset.

Front

What is a credit score?

Back

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