People can sell property in return for a promise of future payments {credit}. Loans have an interest rate and a cost above purchase price. Loans can have charges for paper work. Loans can have interest charges, monthly charges, service fees, loan fees, investigation or credit report fees, carrying charges, administrative handling charges, and time-price differentials.
Loans have a true annual interest rate, which includes interest and other charges {annual percentage rate}| (APR). Loans have a total finance charge, which is total amount that people must pay back minus selling price. Lender must state loan annual percentage rate and total finance charge, according to Truth-in-Lending Act.
Consumer Credit Protection Act or Truth in Lending Law {truth-in-lending}| applies to all consumer credit arrangements, but not business or commercial accounts. This law allows individuals to sue creditors, within one year, for twice the finance charge, plus court costs and attorney's fees, if creditors intentionally do not disclose finance charges or annual percentage rates. This law prohibits companies from issuing credit cards unless people request one. This law limits credit-card holder liability for lost or stolen cards. This law gives people right to cancel credit deals that give creditors liens on homes, to prevent home foreclosure or seizure to pay debt.
For loans, people can have to assign liens on homes or other assets {collateral}|. If people do not pay off loans according to agreements, lienholders can sell homes or assets to recover loans.
Individuals or companies can pay bonds {surety}| to customers if they do not perform contracts.
People can pay back loans {installment loan}| in fixed or changing monthly amounts {conditional sale} {installment sale}.
revolving
Installment loans can require people to repay loan monthly in amount above a minimum amount. Lender charges interest on unpaid total {revolving charge account}. Annual percentage rate for revolving charge accounts varies from 12% to 20%.
types
Store accounts, bank credit cards, gasoline company credit cards, and nationwide credit-agency accounts, like Diner's Club, Carte Blanche, and American Express, are revolving charge accounts.
finance charge
Getting loans can require fees. Customers {debtor} can agree to pay companies or banks {creditor} a percentage of finance charges each month.
auto loan
Buyer possesses and uses vehicle, but creditor retains ownership until buyer makes all required payments. Buyer cannot resell car without creditor's consent. If no payment causes loan default, creditor can take back car {repossession}.
interest charge
Truth in Lending Law requires exact credit cost and interest charge to be in bills, advertising, and sales. Credit cost is finance charge and annual percentage rate. Loan documents list cash price, subtract trade-in allowance and/or down payment, and state finance charge, annual percentage rate, and total cost, including deferred payment charges.
Home or car loan agreements are loans {promissory note}|, with house or car as security.
Stores can allow monthly payments for a number of years {installment plan}. Interest rate is high.
Stores can set aside items that customer has agreed to buy later {layaway plan}|. Interest rate is high.
Total interest {simple interest} can be a fixed percentage of loan. Monthly payments are a percentage of principal plus same percentage of total interest.
Loans {compound interest} can have period, rate, and factor. Multiply principal by factor to find total payments due. Subtract principle from that to find total finance charge. Divide total payments by months in period to find monthly payment.
examples
1 year, 12 months, at 1% = 1.0100. 1 year at 5% = 1.0500. 1 year at 8% = 1.0800. 2 years, 24 months, at 1% = 1.0201. 2 years at 5% = 1.1025. 2 years at 8% = 1.1664. 3 years, 36 months, at 1% = 1.0303. 3 years at 5% = 1.1249. 3 years at 8% = 1.2597. 5 years, 60 months, at 1% = 1.0510. 5 years at 5% = 1.2763. 5 years at 8% = 1.4693. 10 years, 120 months, at 1% = 1.1046. 10 years at 5% = 1.6289. 10 years at 8% = 2.1589. 15 years, 180 months, at 1% = 1.1610. 15 years at 5% = 2.0789. 15 years at 8% = 3.1722. 20 years, 240 months, at 1% = 1.2202. 20 years at 5% = 2.6533. 20 years at 8% = 4.6610. 30 years, 360 months, at 1% = 1.3478. 30 years at 5% = 4.3219. 30 years at 8% = 10.0627.
People can claim real property {lien}| to insure debt payment.
Real-property liens {attachment lien} can prevent property from transfer during lawsuits. Plaintiff files an attachment writ with county official, and it becomes a judgment lien if property owner loses suit.
People who have won court judgments in lawsuits against property owners can obtain real-property liens {judgment lien} by filing judgment in county where property is, to insure payment of judgment, which is debt. Property is not transferable until satisfying judgment.
States can place liens {mechanic's lien} on real property to insure pay for contractors and construction workers. Most states require mechanic's liens for construction.
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Date Modified: 2022.0225