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what is required by law on a loan disclosure statement? |
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APR, total value of all payments, actual loan amount, total finance (interest) costs |
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if you miss a payment the entire loan amount may be due |
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what the lender will do if you default i.e. raise the interest rate, court costs |
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smaller monthly payments are used but they don't pay off the loan in the time frame resulting in a large final payment |
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nonbusiness debt used for nonmortgage expenditures |
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most commonly used credit score named after Fair, Isaac & Co. |
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good to keep credit charges at what percent of your take home pay |
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character, capacity, capital, collateral, conditions |
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3 types of consumer credit |
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single payment loans, revolving credit, service credit |
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credit in advance of transaction, visa, mastercard, amex, etc |
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full payment is not required when services are rendered |
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promotional rates (i.e. 0% APR) |
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very high apr's that are assessed whenever certain rules of the account are violated (late payments) |
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advantages of a credit card |
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interest free grace period, record keeping, convenience, available for emergencies |
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advantage and disadvantage of a credit card |
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state laws governing interest rates, 36% apr in AZ |
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equal credit opportunities act, fair credit reporting act, fair credit billing act, consumer credit protection act |
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equal credit opportunities act |
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main purpose is to prohibit discrimination |
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fair credit reporting act |
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30 day deadline for fixing mistakes, creditors must provide accurate info, job applicant's permission needed to run credit check, toll free numbers during business hours, toll free numbers for removing one self from lists used by credit card companies, one free credit report annually |
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time frames for renewing, disputes, stop payments for defective or missing purchases |
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consumer credit protection act |
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"truth in lending act" accurate disclosure of fees, APR, limited liability of $50 per card |
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"wage earner plan" debt restructure or repayment plan, keep assets, least intense |
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"straight bankruptcy" allows the debtor to start over with a clean slate. certain assets kept, many sold off to satisfy claims. |
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used by high income earners and debt restructure has to be approved by the creditors |
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an investment that derives its value from the price change of another investment |
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contracts that provide for the later delivery of an actual commodity. both buyer and seller are locked in by contract |
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maximum allowable price fluctuation for a commodity. there is no daily price limit for a contract during its final month |
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what percentage of futures traders lose money? |
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what does a futures contract specify (5) |
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1. the product 2. the trading exchange 3. the size of the contract 4. the pricing unit ($/lb, cents/bushel etc) 5. the delivery month |
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short position, suppliers or producers of a product who want to lock in what they believe is the current high price |
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long position, traders who accept the shifting of risk in an attempt to make a profit |
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what is safer, options or futures |
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option to purchase a specified number of shares of common stock for a specified price for a specified period of time. |
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option to sell a specified number of shares of common stock for a specified price and for a specified period of time |
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buyer, owner of option, decide if they want to exercise option contract |
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2 ways seller can sell options |
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naked: seller doesn't own underlying stock covered: seller does own underlying stock |
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leverage, limit risk to no more than original investment |
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short life, no current income |
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