Open-end Credit Quiz

Open-End Credit

• Open-end credit is a pre-approved loan allowing borrowers to repeatedly access funds up to a specified limit.
• Borrowers can pay back the credit before due payments, offering flexibility in fund usage.
• The pre-approved amount is defined in the agreement between lender and borrower.

Annual Percentage Rate (APR)

• APR represents the yearly cost of borrowing money, expressed as a single percentage.
• It includes all fees and additional costs associated with the loan or investment.

Grace Period

• A grace period is a designated time during which a borrower can make payments without incurring penalties.
• The term can also refer to the elegant and refined movement in certain contexts.

Closed-End Credit

• Closed-end credit involves a one-time loan where funds are fully disbursed at closing.
• The borrower must repay the loan, along with interest and finance charges, by a predetermined date.

Finance Company

• Non-bank financial companies (NBFCs) offer banking services without having a banking license.
• These institutions may be restricted from taking public deposits, depending on local regulations.

Loan Shark

• A loan shark refers to a moneylender who charges excessively high interest rates, typically in illegal circumstances.

Usury Laws

• Usury laws regulate the maximum interest rates that can be charged on loans.
• These laws exist to prevent the practice of charging prohibitively high rates.

Pawnbroker

• A pawnbroker is a lender who provides funds based on the security of an article pawned by the borrower.
• The article serves as collateral for the loan, allowing the pawnbroker to sell it if the borrower fails to repay.

Service Credit

• Service credits are financial compensations given directly to customers when a service provider fails to meet performance standards.
• They are designed to address unexcused failures related to key performance indicators or service level agreements.