Credit Basics Review

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A line of credit established in advance so the borrower does not have to apply for credit each time new credit is desired.

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open-end credit

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A loan which the borrower must repay the amount in a specified number of equal payments.

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closed-end credit

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Short-term loan that provides immediate cash by securing a borrower's written check or receiving authorization for automatic withdrawal from the borrower's depository institution account.

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payday loan

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Tangible items leased with the condition that the item will be owned by the renter if the term of rent (contract) is completed.

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rent-to-own loan

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A loan based on the value of personal property.

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pawn loan

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What is it called when the borrower gives the lender his/her automobile title in exchange for a set amount of cash? Options: pawn loan, title loan, refund loan, payday loan

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title loan

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Short-term cash advance secured by a taxpayer's expected tax refund.

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refund loan

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Annual interest rates for alternative loans can be as high as 400%.

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true

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All lenders check a person's credit report and score during the loan approval process.

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false

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The terms of a loan are always consistent for the length of the loan.

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false