UNIT 20. Credit

1. Complete the sentences, using the appropriate words from the box:

Debtors; default; unsecured; collateral; interest; conditions; creditors; finance charge; secured; variable; usury; in the future.

1. Usingcredit means buying goods or services now in exchange for a promise to pay….

2. People who lend money or provide credit are called….

3. People who borrow money or buy on credit are called ….

4. Additional money owed to the creditor is called the….

5. The two general types of credit are … and ….

6. A … is some property of value put up by a consumer as protection in the event the debt is not repaid.

7. A borrower who does not make the required payments is said to …on the loan.

8. The cost of credit includes … and other finance charges.

9. Charging any amount above the legal limit is called ….

10. Interest rates can vary widely depending on the lender and the economic … at the time.

11. Some companies now offer…interest rates, when the amount of interest you are charged changes from time to time and is comput­ed based on financial market indicators.

2. Are the statements true (T) or false (F)? Correct the false statements.

1. Credit means lending money now in exchange for a promise to repay it in the future.

2. Cred­itors usually pay debtors additional money over the amount borrowed for the privilege of using the credit.

3. There are three general types of credit.

4. Secured credit is credit for which the consumer is not required to pledge property in order to obtain it.

5. If a borrower defaults, the lender can take the collateral.

6. Each state sets limits on the amount of interest that can be charged for various types of credit.

7. Lenders who charge interest rates below the legal minimum may be liable for both civil and crim­inal penalties.

8. Besides the interest paid on a credit sale, there are sometimes other charges that may be added onto the basic price: credit property insurance; credit life/disability insurance;service charge; penalty charge, and others.