Credit and car payments
What is credit?
Barrowed money
What is interest?
The cost of barrowing money
Financial Charge
The total cost of interest rate over period of loan
Principle
How much you ask for (loan)
Rate
Simple interest amount
Term
The amount of time over the period of the loan
Loan
The amount of money you ask the bank for to make a purchase
Down Payment
Initial payment when something is bought with credit
Monthly Payment
The amount of money you pay monthly of the period of your term
Credit score range
300-850
Poor credit
360-580
Fair credit
580-640
Average credit
640-700
Good credit
700-750
Excelent credit
750-850
Car value
Down payment + Principle
Finance Charge
Principle x Rate x Term
Total cost of loan
Principle + Finance Charge
Monthly Plan
Total cost of loan / term (months)
20-10 rule
your total debt shouldn't equal more than 20% of your annual income, and that your monthly debt payments shouldn't be more than 10% of your monthly income.
Capacity
Having the ability to do something
Capital
The amount of money you have
Types of credit
Revolving, open ended, installment
revolving credit
credit that has limits
open ended credit
credit that doesnt stop
installment credit
credit that has a fixed rate
Forms of credit
credit card, personal loan, car loans, mortage loans, student loans
Primary lending institutions
commercial banks, credit unions, online banks, pay day lenders, brokerage companies, cash and loan, mortage
Credit bureaus
Trans union, equifax, experian
what a lender uses to evaluate your eligibility
capital, capacity, character
Fico score
The score given to you be credit bureaus ( credit score)
Credit Report
Report card for your credit
Credit history
Transcript of your credit
Credit score
A score that shows how trustworthy you are to pay back debt on time
Payment history makes up ____ of your credit score
35%
Amount owed makes up ____ of your credit score
30%
Length of credit makes up ____ of your credit score
15%
New credit makes up ____ of your credit score
10%
Types of credit makes up ____ of your credit score
10%
What does it mean when your credit goes into defualt?
when you fail to pay debt and the bank sue's you
CV
DP + P
FC
P x R x T
TCL
FC + P
MP
TCL / T(months)