Understanding Consumer Credit Costs

Understanding Consumer Credit Costs

Assessment

Flashcard

Business

9th Grade

Practice Problem

Hard

Created by

Wayground Content

FREE Resource

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20 questions

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1.

FLASHCARD QUESTION

Front

Jessica is considering using a secured loan to finance her airfare to Europe. What is a major risk associated with taking a secured loan in her situation?

Back

She could lose her violin if she fails to repay the loan.

2.

FLASHCARD QUESTION

Front

Why might a borrower choose an unsecured loan over a secured loan, despite potentially higher interest rates? Options: Unsecured loans require collateral., Unsecured loans have no risk of losing personal assets., Unsecured loans are only available for small amounts., Unsecured loans have longer repayment periods.

Back

Unsecured loans have no risk of losing personal assets.

3.

FLASHCARD QUESTION

Front

A borrower is comparing a bank loan and a payday loan. What strategic factor should they consider to avoid high costs?

Back

The annual percentage rate (APR).

4.

FLASHCARD QUESTION

Front

What is a strategic advantage of using a credit union for a loan compared to a bank?

Back

Credit unions have lower interest rates due to lower overhead.

5.

FLASHCARD QUESTION

Front

If a borrower has a poor credit history, which type of lending institution might they consider, and what is a potential drawback?

Back

Risk-based lending companies; they have high fees and interest rates.

6.

FLASHCARD QUESTION

Front

What is a strategic reason for a borrower to use a retail store credit card despite high-interest rates?

Back

To receive discounts and advance notice of sales.

7.

FLASHCARD QUESTION

Front

A borrower is considering a pawnshop loan. What strategic consideration should they make regarding the collateral?

Back

The collateral will be sold if the loan is not repaid.

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