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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?   

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write the question and the answer
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 
slide2

Criteria of Negotiability

  • How to compute interest using different methods
agenda
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
types of loans and procedures for borrowing money

Types of Loans and Procedures for Borrowing Money

Unit C Basic Business Law

Objective 6.02

types of loans
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
types of loans1
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)
types of loans2
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
types of loan regulations
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
types of loan regulations1
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
slide10

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
procedures for borrowing money
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)
procedures for borrowing money1
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