Personal Finance: Credit Basics

Front

A line of credit established in advance so the borrower does not have to apply for credit each time new credit is desired.

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Open‐end credit

Front

A loan which the borrower must repay the amount in a specified number of equal payments.

Back

Closed‐end credit

Front

Short‐term loan that provides immediate cash by securing a borrower’s written check or receiving authorization for automatic withdrawal from the borrower’s depository institution account.

Back

Payday loan

Front

Tangible items leased with the condition that the item will be owned by the renter if the term of rent (contract) is completed.

Back

Rent‐to‐own loan

Front

A loan based on the value of personal property.

Back

Pawn loan

Front

The borrower gives the lender his/her automobile title in exchange for a set amount of cash.

Back

Title loan

Front

Short‐term cash advance secured by a taxpayer’s expected tax refund.

Back

Refund anticipation loan

Front

Annual interest rates for alternative loans can be as high as 300%.

Back

True

Front

Do all lenders check a person’s credit report and score during the loan approval process?

Back

False

Front

The terms of a loan are always consistent for the length of the loan.

Back

False