# Making Informed Decisions When Applying for Loans

## Making Informed Decisions When

## Finance Charge:
The dollar amount the credit will cost you. Finance charges include interest and may also include transaction fees and service fees.

## Principal:
The amount of money owed on a debt, on which interest is calculated.

## 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.

## 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.)

## Default:
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.

## Collateral:
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.

## Credit Bureau:
A private company that keeps a record of your credit history for distribution upon request by lenders.