1. Ch. 11 Credit and Debit

2. If a friend asks you to borrow money what are some of the questions you are going to ask?

3. Terms to Know Credit - buy now, pay later Creditor - party lending the money Debtor - Party buying the goods/services (borrrowing the money) Interest - fee creditors charge for lending money Credit - buy now, pay later Creditor - party lending the money Debtor - Party buying the goods/services (borrrowing the money) Interest - fee creditors charge for lending money

4. Types of Credit Open-End Credit Creditor give you a maximum amount of money Ex: Credit Cards Open-End Credit Creditor give you a maximum amount of money Ex: Credit Cards Closed-End Credit Credit given for a specific amount of money Ex: buying a car

5. Credit How do you obtain credit? What do they look at? What is the difference between credit cards and debit cards? How does repayment work? What if you don’t repay? How do you obtain credit? What do they look at? What is the difference between credit cards and debit cards? How does repayment work? What if you don’t repay?

6. Secured Transactions Secured Loan - Loan backed up with collateral that the credit can take if not paid. Collateral - property offered as a security interest Security Interest - creditor’s right to use collateral to recover debt Secured Party - Person holding security interest Default - not repaying the loan Secured Loan - Loan backed up with collateral that the credit can take if not paid. Collateral - property offered as a security interest Security Interest - creditor’s right to use collateral to recover debt Secured Party - Person holding security interest Default - not repaying the loan

7. Unsecured Loan Doesn’t require collateral Interest is usually higher than a secured loan Doesn’t require collateral Interest is usually higher than a secured loan

8. Buying a Car - Financing Regulation Z of the Truth in Lending Act specifies lenders must disclose 2 things: APR - true interest rate of the loan Finance Charge - cost of loan in $ and cents Regulation Z of the Truth in Lending Act specifies lenders must disclose 2 things: APR - true interest rate of the loan Finance Charge - cost of loan in $ and cents

9. Things to know before you finance: ｷ Exact price of vehicle ｷ Amount you are financing ｷ Finance charge ｷ APR ｷ Number and amount of payments ｷ Total sales price ｷ Exact price of vehicle ｷ Amount you are financing ｷ Finance charge ｷ APR ｷ Number and amount of payments ｷ Total sales price

10. Defective Vehicles Seller can be held liable if: Breach of express warranty, they made a promise to do something and they didn’t do it. Example: they are going to fix the alignment before you buy it and they don’t Breach of warranty of merchantability, seller was a dealer and the car was not fit to be driven. Seller can be held liable if: Breach of express warranty, they made a promise to do something and they didn’t do it. Example: they are going to fix the alignment before you buy it and they don’t Breach of warranty of merchantability, seller was a dealer and the car was not fit to be driven.

11. Defective Vehicle Seller can be held liable if: Fraud or breach of express warranty, seller made statements about the car that weren’t true Example: seller said the car had new brakes when the brakes aren’t new Breach of the state consumer protection law, only if vehicle is for personal use. Seller can be held liable if: Fraud or breach of express warranty, seller made statements about the car that weren’t true Example: seller said the car had new brakes when the brakes aren’t new Breach of the state consumer protection law, only if vehicle is for personal use.

12. Lemon Law To be considered defective in many states it must be: Substantially defective At the dealer 3 time for repairs No older than 1 year Not exceed 15,000 miles To be considered defective in many states it must be: Substantially defective At the dealer 3 time for repairs No older than 1 year Not exceed 15,000 miles

13. Motor Vehicle and Cost Savings Act Bumper Standards Average Fuel economy standards Produce cars that use less fuel Annual fuel cost listed Range of fuel economy listed Odometer Protection Can’t turn back/disconnect odometer Bumper Standards Average Fuel economy standards Produce cars that use less fuel Annual fuel cost listed Range of fuel economy listed Odometer Protection Can’t turn back/disconnect odometer

15. Student Loans 2 types: 1.Government Student Loans $ Subsidized - gvnt pays interest while still in school $ Unsubsidized - student pays accrued interest 2.Private Student Loans $ Loans goes through a bank $ Based on tuition $ Higher interest rates 2 types: 1.Government Student Loans $ Subsidized - gvnt pays interest while still in school $ Unsubsidized - student pays accrued interest 2.Private Student Loans $ Loans goes through a bank $ Based on tuition $ Higher interest rates

16. Signs of Debt Problems make minimum monthly payments have trouble making minimum monthly payments miss payments or pay late make minimum monthly payments have trouble making minimum monthly payments miss payments or pay late Total balance increases each month You receive second/third payment due notices from creditors Borrow money to pay off old debts exceed the credit limits denied credit