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Write the question and the answer

Write the question and the answer

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Write the question and the answer

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  1. Write the question and the answer 1. Daniel buys goods on credit or borrows money. Which term identifies Daniel?    • A. Creditor  • B. Debtor  • C. Loanee  • D. Secured Party  2. Stephen uses his home as security for a loan. Which term describes the use of his home in this transaction?    A. Collateral  • B. Credit  • C. Interest  • D. Surety 

  2. Criteria of Negotiability • How to compute interest using different methods

  3. Agenda • Warm up • Review Methods of Calculating Interest • Notes-Loan types and Loan Procedures • Research Credit Cards • Study your notes for objectives 6.02—Yesterday and Today’s notes

  4. Types of Loans and Procedures for Borrowing Money Unit C Basic Business Law Objective 6.02

  5. Types of Loans Secured Loan Creditors obtain an interest in something of value • Collateral – Property that is the subject of the loan • Cosigner – Helps protect a loan when a borrower’s credit rating is poor • Secured Party – Lender or seller who holds secured interest • Repossession – Property is returned because of non-payment

  6. Types of Loans Unsecured Creditors obtain no collateral for loan • No Collateral • Creditors make sure that debtor is reliable and able to pay back loan • Example (Credit Cards)

  7. Types of Loans Single Payment Loan Debtor pays off loan in one payment • Promissory Note - Written promise to repay with interest • Installment Loan - Paid in regular payments

  8. Types of Loan Regulations Truth in Lending Act Regulation Z • Actual cost of finance charge must be known • Annual percentage rate • Liable for $50 unauthorized credit card purchases made prior to notification

  9. Types of Loan Regulations Equal Credit Opportunity Act • Applying for credit • Granted only on the ability to repay • Evaluation of application • Cannot discriminate based on gender, age, ethnicity, or religion • Acceptance and rejection • Based on income, current debts, or poor credit record

  10. Procedures for Borrowing Money • Loan Application • Consideration • Reputation for paying bills • Source of regular income • Competency • Number of dependants • Use of loan and for how long

  11. Procedures for Borrowing Money • Rules • Cannot ask sex, race, national origin, or religion • Cannot refuse on basis of sex or marital status • Marital status may/may not be asked • Do not have to disclose income from alimony or child support unless relying on income • May not be prohibited from using given names (birth)

  12. Procedures for Borrowing Money • Interview • Reference and credit check • Request for credit • Inaccuracy of credit report • Acceptance/Rejection • Must inform client within 30 days • If denied, must provide, upon request, reasons for denial within 60 days • Cannot close account due to change in marital status, unless person unwilling/unable to pay