5.1 Intro to Credit Review

Front

Amount you are borrowing is the ____________.

Back

Principal

Front

Percentage (usually per year) you are being charged for the right to borrow the money is the ____________.

Back

Interest

Front

The amount of time over which you pay back your principal and interest is the ____________.

Back

Term

Front

What is a cosigner?

Back

Someone who agrees to take on the responsibility of repayment if the loan goes unpaid.

Front

In Shady Sam, you were asked to maximize profits as the loan shark. The loans that were most profitable tended to have the ______________ terms and the ________________ monthly payments.

Back

longest/lowest

Front

________________ are/is used to finance a specific purchase for a specific amount of time. Regular payments are made to pay the interest and the principal.

Back

Installment Loans

Front

________________ are/is an open line of credit that can be used for any purchases as long as you’re under the credit limit. Payment amounts vary each pay period based on the size of the debt.

Back

Revolving Credit

Front

________________ are/is debt is tied to a specific asset that can be used as collateral and repossessed if borrower doesn’t make payments

Back

Secured Debt

Front

________________ are/is debt is not tied to a specific asset; there is no collateral that can be repossessed if borrower defaults

Back

Unsecured Debt

Front

________________ are/is interest rate can change during the duration of the loan based on the prime rate or an index rate.

Back

Variable Rate