Personal Finance Chapter 8 Vocab

adjustable rate mortgage

A loan agreement in which the interest rate, payment amount, and length of the loan can change over time

amortization

Repaying a debt by making regular payments of principal and interest over a period of time

automatic payments

Payments that are made by transferring money electronically from a checking account to another account every billing period

balloon payment

A large loan payment that is much higher than the other payments and that must be paid at a set time, often as the last loan payment

certified check

A personal check for which payment is guaranteed by the bank on which it is drawn

closing costs

Expenses the borrower must pay in order to get a loan, such as appraisal fees, credit report fees, recording costs, and inspection fees

cosigner

A person who agrees to repay a loan if the borrower does not repay it

grace period

The amount of time you have before a credit card company starts charging you interest on your new purchases

installment loan

A type of debt in which you borrow money for a period of time with an agreed-upon interest rate and repayment plan

money order

A type of prepaid check that directs payment of a sum of cash to a payee

online banking

A service that allows you to make payments and manage your bank account using the bank's Web site

personal loans

Loans that are based on personal creditworthiness and do not require collateral

prepayment penalty

A fee charged for paying off a loan before the agreed-upon time

sales finance company

A type of lender that makes a loan for the purchase of consumer goods, such as cars or household appliances

secured loan

A debt agreement in which the borrower pledges property of value, called collateral, as security for the loan repayment

student loan

A debt that is used to finance education costs

wire transfer

The process of sending money electronically rather than using paper checks