UA CSM 204 - Choosing a source of credit: the cost of alternatives (7 pages)

Unformatted text preview:

CSM 204 Chapter 7 Lecture Outline of Previous Lecture I Consumer Credit II Consumer Credit Questions III Advantages of Credit IV Disadvantages of Credit V Types of Credit VI Protecting Against Fraud VII Online Purchases VIII Measuring Credit Capacity IX Your Credit Report X Fair Credit Reporting Act XI Applying for Credit XII FICO Credit Scoring XIII Other Credit Scoring Systems XIV Correcting Credit Errors XV Quiz 2 1 Outline of Current Lecture I II III IV V VI VII VIII IX X XI XII XIII XIV XV What kind of loan should you seek Student loans appendix The cost of credit Tackling the Trade Offs Calculating the cost of credit Cost of open ended credit Other cost factors Credit card accountability Responsibility and Disclosure Act of 2009 Why consumers don t pay Reasons for debt Debt warning signs Getting help What if you become overextended What if you don t pay Quiz 2 2 Current Lecture These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Chapter 7 Choosing a Source of Credit The Cost of Alternatives What Kind of Loan Should You Seek Inexpensive loans Family If worst comes to worst would I be willing to give this person the money if they cannot pay me back Secured with Savings Medium Priced Loans Banks savings and loans credit unions Expensive Loans Finance companies Check cashing services Retailers Credit cards Cash advances Predatory Lending Payday loan easy money Student Loans Appendix Usually lower interest rate Legal obligation All come from U S Department of Education Must be paid back Now not discharged in bankruptcy The Cost of Credit Finance charge The total dollar amount you pay to use credit Annual Percentage Rate APR The percentage cost of credit on a yearly basis True rate of interest so that you can compare rates with other sources of credit Tackling the Trade Offs Term vs Interest costs Longer loans Lower payments bus more total interest Lender risk vs