Mortgages
How does APR for mortgages differ from a traditional interest rate?
The mortgage APR includes interest, lender fees, and closing costs.
What should you decide which credit card is best for you?
Low APR, some rewards, no annual fees, & no penalties
What are the two components of amortization?
Principal and Interest
How do payday loans APRs get so high?
Loan amounts are small and fees are extremely high
What are the 3 major types of credit?
Mortgage, auto loan, credit cards
What is the downside of an adjustable rate mortgage?
The payments are unpredictable every year.
Both allow you to make purchases in store and online.
What happens as months progress with an amortized loan?
Payments are the same, but principal is paid down quicker
Traditional requires a credit check and high credit score.
What is the difference between leasing and owning?
Leasing a car is making monthly payments to use a car for a fixed period of time, but then you return it without owning it.
What is a good reason to choose a 30-year fixed mortgage rate?
You want low, predictable monthly payments.
What is the Schumer Box?
A standardized way to presenting key terms of your credit card.
Why is it a good idea to pay more than your amortized payment?
Pay off loan faster, less total interest, less money overall
Why are payday loans so popular?
Accessible to people who need to borrow small amounts of money and don't have better options.
What happens to your interest when you have a high credit score, and larger down payment?
It decreases
What is a variable rate loan?
Has a lower interest rate and can increase or decrease over the loan term
What is the advantage of paying your credit card balance in full each month?
You avoid paying any interest and fees.
Paying off debt overtime in equal installments; some goes to principal and some to interest.
Amortization
What is an outstanding balance?
Amount you owe after you have made your most recent payment.
What is the largest amount you can charge on a credit card if you own $725, but the credit limit is $800?
$75
What ways can you decrease your total amount of a mortgage?
Shorter loan term, qualify for lower interest rate, increase down payment, good credit score
How does a credit card work?
You get a line of credit and then have to pay the balance in full or a minimum payment.
What happens to the interest each month on a amortized loan?
It shrinks
What three components are details of any loan?
Principal, interest, and loan term
What actions would decrease a person's net worth?
Take out a loan to buy a brand new car.