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Personal Finance Chapter 10


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Cars, boats, motorcycles, etc
What types of items are personal loans typically used for?
Down Payment
What is the fraction of an items cost that a consumer pays up front when taking out a personal loan?
24 to 72 months.
When do personal loans typically mature?
What may a creditor sometimes ask for when you sign loan documents if you don't have good established credit? This person promises to repay the loan if the borrower defaults.
Annual Percentage Rate
By law the lenders are required to report the interest rate that factors in all of the relevant loan charges. This interest rate is known as _______ ?
Secured Loan
What type of loan has some asset pledged against it as collateral?
Home Equity Loan
What type of loans allow home owners to take borrow money using the equity in their house as collateral?
Federal Perkins Loan
What type of loan carry's very low interest rates and have longer grace periods and are typically used for students with exceptional financial needs?
1. Fill out Application
2. List your sources of income
3. Provide income statement and balance sheet.
4. Lender will access credit score
5. Lender will make a decision
6. Co-signer might be required

What is the process of taking out a personal loan?
Collateral are item(s) of value that you agree to surrender to the lender if you fail to pay your loan as agreed.
Explain how collateral works.
1. down payment
2. mortgage origination fees
3. appraisal fees
4. home inspection fees
5. filing fees
6. mortgage interest

What are some of the costs of buying a home?
Adjustable Rate Mortgage
What type of mortgage a mortgage has a rate of interest that adjusts to reflect market conditions.
Annual Percentage Rate (APR)
What describes the interest rate for a whole year, rather than just a monthly fee/rate as applied on a loan.
What do you call something that is pledged as security for repayment of a loan and will be forfeited in the event of a default.
What do you call it when you fail to repay your loan as agreed.
Federal Stafford Loan
What is a federally guaranteed loan program that allows students to borrow funds from lenders.
Fixed Rate Mortgage
What do you call a mortgage that is a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan.
What is a long term rental agreement.
Liability Coverage
What type of insurance coverage provides compensation for harm or wrong to a third party for which an insured is legally obligated to pay.
Line of Credit
What do you call an amount of credit that is extended to a homeowner for continued use?
Maturity Date
What do you call the date on which an obligation must be repaid.
Personal Loan
What do you call a loan that establishes consumer credit that is granted for personal use, usually unsecured.
Policy Rider
What is a provision that may be added to an insurance policy, at an additional cost.
Subprime Mortgage
What do you call higher interest rate mortgages made to people with poor credit scores?
Teaser Rate
What do you call an interest rate charged to a customer during the initial stages of the loan.
Unsecured Loan
What do you call a loan that does not require the borrower to put down any type of collateral?

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