What Are Credit Terms?

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Credit terms refer to when credit is loaned to a borrower with the expectation that the lender will have their money paid back on time and with interest. Read the prospectus or loan document to better understand credit terms for a loan with help from a financial adviser in this free video on credit.

Part of the Video Series: Investments & Money Management Tips
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Video Transcript

Have you ever bought anything using a credit card? Hi, this is Roger Groh, with Groh Asset Management. Today, we're here to talk about credit, what it means and how you can use it. If you think about it if you use credit it's because somebody has lent you money and they expect two things in return. Number one, that you'll pay them back on time their principal, and that number two, you'll pay them some interest. The length of time to pay back varies per each loan, and certainly the rate that you pay is going to be different for each loan that you get. If it's a credit card beware. The credit card companies usually have the right to vary the interest rate that you pay without asking you. Now, that begins to change a little bit in 2010, but for now, if your credit score is going down chances are your credit interest rate is going up. Other uses of credit; well, buying a car or buying a house. If you own a retail store and your suppliers are giving you product for thirty days or sixty days really that's a loan, if you think about it, where you have a month or two to pay them back. The key in all of these is to really understand how they work, what you owe, and what the potential penalties might be. Get a copy of the prospectus or a copy of the loan document. If you don't read them carefully and don't understand them go to your lawyer and have your lawyer look at it, and then explain it to you. It's worth the time and effort. I'm Roger Groh, with Groh Asset Management. Remember, shop for the best rate.

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