Last Updated: May 3, 2023
Equal Credit Opportunity Act (ECOA): A federal regulation which requires lenders to promote the availability of credit to all creditworthy applicants without regard to race,color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract); to whether all or part of the applicant’s income derives from a public assistance program; or to whether the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The regulation prohibits creditor practices that discriminate on the basis of any of these factors.
Contract: A written binding document, describing terms of an agreement between two or more persons. (Keep all paperwork. Later, if there are any questions, you will have your agreement in writing.) Annual Percentage Rate (APR): The cost of your credit as a yearly rate. APR is a combination of the interest rate plus the fees charged on your loan. APR is higher than the interest rate because it includes both fees and interest as finance charges. The calculation of APR is mandated pursuant to Federal Law (12 CFR Part 1026 – Truth in Lending Act (“TIL-APR”)). It is intended to provide a single value for a consumer to compare the cost of credit between one lender and another.
The dollar amount the credit will cost you. Finance charges include interest and may also include transaction fees and service fees.
The amount of money owed on a debt, on which interest is calculated.
The total amount of money owed to a lender.
The cost of borrowing money, generally a percentage of the amount owed.
Failure to pay a debt as agreed to on a contract. When a loan is in default, the lender may demand full payment of the remaining debt.
Security pledged by a borrower to protect the interests of the lender; in case of default, the lender may take ownership of the security, if any, pledged by the borrower.
A private company that keeps a record of your credit history for distribution upon request by authorized parties. When you apply for credit, a lender may request a credit report to review when considering your application.