CFCI TYPES OF CREDIT EXAM RATED 100% CORRECT
Cash Advance -Answer- A service provided by many credit card issuers allowing cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank or other financial agency. Cash advances typically carry a high interest rate ...
CFCI TYPES OF CREDIT EXAM RATED
100% CORRECT
Cash Advance -Answer- A service provided by many credit card issuers allowing
cardholders to withdraw a certain amount of cash, either through an ATM or directly
from a bank or other financial agency. Cash advances typically carry a high interest rate
- even higher than credit card itself - and the interest begins to accrue immediately.
Cash Back -Answer- A cardholder benefit offered by some credit card companies that
pays the cardholder a small percentage of their net expenditures (purchases less
refunds). Cash back benefits often provide the cardholder with the opportunity to
choose from taking the cash, or using the "points" for purchases, travel (as with miles
awards for air travel) or gift cards.
Joint Account -Answer- A bank or brokerage account that is shared between two or
more individuals. Joint accounts are most likely to be used between relatives, couples
or business partners who have a level of familiarity and trust for each other, as this type
of account typically allows anyone named on the account to access funds within it.
Authorized User -Answer- A person who has permission to use and/or carry another
person's credit card, but isn't legally responsible for paying the bill.
Secured Credit Card -Answer- A type of credit card that is backed by a savings account
used as collateral on the credit available with the card. Money is deposited and held in
the account backing the card.
Default -Answer- The failure to promptly pay interest or principal when due. Borrowers
may default when they are unable to make the required payment or are unwilling to
honor the debt.
Peer-to-Peer Lending -Answer- A method of debt financing that enables individuals to
borrow and lend money - without the use of an official financial institution as an
intermediary.
Dealership Financing -Answer- The buyer and dealer enter into a contract where the
buyer purchases a vehicle and agrees to pay, over a period of time, the amount
financed plus a finance charge.
Down Payment -Answer- A type of payment made in cash during the onset of the
purchase of an expensive good/service. The payment typically represents only a
percentage of the full purchase price; in some cases it is not refundable if the deal falls
through.
, Cash Allowance -Answer- The allowance is a rebate or discount that is applied to the
vehicle price or provided as "cash back," which the customer can receive as a rebate
check in the mail.
Well-Qualified Buyer -Answer- A customer who can take advantage of special financing
or lease terms because the seller deems them "well-qualified".
Lease -Answer- A contract by which one party (like a car dealer) conveys property (like
a car), to another (like a customer) for a specified time, usually in return for a periodic
payment.
Residual Value -Answer- How much a fixed asset is worth at the end of its lease, or at
the end of its useful life. If you lease a car for three years, its residual value is how much
it is worth after three years.
Manufacturer's Suggested Retail Price (MSRP) -Answer- The amount of money for
which the company that produces a product recommends that it be sold in stores.
MSRP does not necessarily correspond to the price retailers actually use or to the price
customers are willing to pay.
Default Rate -Answer- The rate of borrowers who fail to remain current on their loans. It
is a critical piece of information used by lenders to determine their risk exposure and
economists to evaluate the health of the overall economy.
Subsidized Direct Loans -Answer- A student loan that the federal government pays
interest on as long as the student is in school half-time.
Unsubsidized Direct Loans -Answer- A student loan where the student is responsible for
the interest during the time they are in school. They can pay that interest while studying
or have it rolled into the loan.
Direct PLUS Loans -Answer- A student loan offered to parents of students currently
enrolled in post-secondary undergraduate education (or to graduate students). With a
Direct PLUS loan, the parent borrows money on the student's behalf.
Consolidation Loan -Answer- A loan that combines two or more education loans into a
single loan, allowing the borrower to make a single monthly payment. Consolidation is
available for both federal and private loans
Mortgage -Answer- Instruments used by individuals and businesses to make large real
estate purchases without paying the entire value of the purchase up front. Over a period
of many years, the borrower repays the loan, plus interest, until he/she eventually owns
the property free and clear.
Fixed-Rate Mortgage -Answer- A mortgage that has a fixed interest rate for the entire
term of the loan. The distinguishing factor of a fixed-rate mortgage is that the interest
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