Annual
Percentage Rate (APR) -- The cost of credit expressed as a yearly
rate.
Appraisal
Fee -- The charge for estimating the value of property offered as
security.
Automated
Teller Machines (ATMs) -- Electronic terminals located on bank
premises or elsewhere, through which customers of financial institutions may
make deposits, withdrawals, or other transactions as they would through a bank
teller.
Balloon
Payment -- A large extra payment that may be charged at the end of a
loan or lease.
Closed-End
Lease -- A lease in which you are not responsible for the difference
if the actual value of the item at the scheduled end of the lease is less that
the residual value, but you may be responsible for excess wear-and-use charges
and for other lease requirements.
Collateral -- Property, such as stocks, bonds or
a car, offered to support a loan and subject to seizure if you default.
Cosigner -- Another person who signs your loan
and assumes equal responsibility for it.
Credit -- The right granted by a creditor to pay
in the future to buy or borrow in the present; a sum of money due a person or
business.
Credit
Bureau -- An agency that keeps your credit record; also called a
credit-reporting agency.
Credit
Card -- Any card, plate, or coupon book used periodically or
repeatedly to borrow money or buy goods or services on credit.
Credit
History -- The record of how you've borrowed and repaid debts.
Creditor
-- A person or business from whom you borrow or to whom you owe
money.
Credit
Insurance -- Health, life, accident, or dispurtion of income
insurance designed to pay the outstanding balance of debt.
Credit Scoring
System -- A statistical system used to rate credit applicants
according to various characteristics relevant to creditworthiness.
Creditworthiness -- Past, present and future
ability to repay debts.
Debit Card (EFT
Card) -- A plastic card, looks similar to a credit card, that
consumers may use at an ATM or to make purchases, withdrawals, or other types
of electronic fund transfers.
Default -- Failure to repay a loan or otherwise
meet the terms of your credit agreement.
Disclosures -- Information that must be given to
consumers about their financial dealings.
Elderly
Applicant -- As defined in the Equal Credit Opportunity Act, a
person 62 or older.
Electronic Fund
Transfer (EFT) Systems -- A variety of systems and technologies for
transferring funds electronically rather than by check.
Finance
Charge -- The total dollar amount credit will cost.
Home Equity
Line of Credit -- A form of open-end credit in which the home serves
as collateral.
Joint Account
-- A credit account held by two or more people so that all can use
the account and all assume legal responsibility to repay.
Late
Payment -- A payment made later than agreed upon in a credit
contract and on which additional charges may be imposed.
Lessee -- The party to whom the item is leased.
In a consumer lease, the lessee is you, the consumer. The lessee is required to
make payments and to meet other obligations specified in the lease agreement.
Lessor -- The person or organization who
regularly leases, offers to lease, or arranges for the lease of the item
Liability on an
Account -- Legal responsibility to repay debt.
Open-End
Credit -- A line of credit that may be used repeatedly, including
credit cards, overdraft credit accounts, and home equity lines.
Open-End
Lease -- A lease agreement in which the amount you owe at the end of
the lease term is based on the difference between the residual value of the
leased property and its and it's realized value. Your lease agreement may
provide for a refund of any excess if the realized value is greateer than the
residual value. In an open-end consumer lease, assuming you have met the use
and wear standards, the residual value is considered unreasonable if it exceeds
the realized value by more that three times the base monthly payment (sometimes
call the "three-payment rule").
Overdraft
Checking -- A line of credit that allows you to write checks or draw
funds with an EFT card for more than your actual balance, with an interest
charge on the overdraft.
Point-of-Sale
(POS) -- A method by which consumers can pay for purchases by having
their deposit accounts debited electronically without the use of checks.
Points and
Origination Fees -- Fees paid to the lender for the loan. One point
equals 1 percent of the loan amount. Points are usually paid in cash at
closing. In some cases, the money needed to pay points can by borrowed, but
doing so will increase the loan amount and the total costs. An origination fee
covers the lender's work in preparing your mortgage loan.
Realized
Value -- (1) The price the lessor or assignee receives for the
leased item at disposition, (2) the highest offer for the leased item at
disposition, or (3) the fair market value of the leased item at termination.
The realized value may be either the wholesale or the retail value as specified
in the lease agreement.
Rescission -- The cancellation of a contract.
Residual
Value -- The end-of-term value of the item established at the
beginning of the lease and used in calculating your base monthly payment. The
residual value is deducted from the adjusted capitalized cost to determine the
depreciation and any amortized amounts. It is an estimate that may be
determined in part by using residual value guidebooks. The residual value may
be higher or lower than the realized value at the scheduled end of the lease.
Security -- Property pledged to the creditor in
case of a default on a loan.
Security
Interest -- The creditor's right to take property or a portion of
property offered as security.
Service
Charge -- A component of some finance charges, such as the fee for
triggering an overdraft checking account into use.
