Podcast
Questions and Answers
What is open end credit?
What is open end credit?
What does the annual percentage rate represent?
What does the annual percentage rate represent?
The actual yearly cost of funds over the term of a loan.
The ______ period refers to a period of time before loan payments are due.
The ______ period refers to a period of time before loan payments are due.
grace
What is closed end credit?
What is closed end credit?
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What is a finance company?
What is a finance company?
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A loan shark charges low interest rates.
A loan shark charges low interest rates.
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What do usury laws regulate?
What do usury laws regulate?
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What is a pawnbroker?
What is a pawnbroker?
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What are service credits?
What are service credits?
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Study Notes
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.
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Description
Test your knowledge on open-end credit and its financial terminology. This quiz includes key concepts such as annual percentage rates and their implications. Perfect for students or anyone interested in finance.
