Everfi-Financial Literacy Lesson 5- Credit & Debt

Using a loan could help with the purchase of which of the following?

• A new television

• A dream wedding

• A house

• Airline tickets to your dream vacation

When are loans a good option to use?

• To pay for airline tickets to your dream vacation

• When paying for higher education

• To buy that new television

• For a dream wedding

Which items are important to consider when selecting a credit card?

• Annual Percentage Intrest Rate (APR)

• Fees

• The look of the credit card

• Penalties

• Credit Limit

A credit limit is...

• the money you spend in a month

• the Max amount of money you can charge to a credit card

• the amount that will be on your bill

• the interest amount you will pay

What is NOT a benefit of having a good credit score?

• When you need a loan, you'll have more loan offers to pick from

• You'll get better interest rates on your loans

• It will be easier to get an apartment

• You'll get accepted to better education institutions.

Which of the following can be affected by your credit score

• When you need a loan, you'll have more loan offers to pick from

• You'll get better interest rates on your loans

• It will be easier to get an apartment

• You'll get accepted to better education institutions.

• It will be easier to get a car

A secured loan is a loan backed by collateral—financial assets you own, like a home or a car—that can be used as payment to the lender if you don't pay back the loan. The idea behind a secured loan is a basic one. Lenders accept collateral against a secured loan to incentivize borrowers to repay the loan on time.

So, Secured loans are less costly than unsecured loans because _________.

• They usually have a lower interest rate

• They require collateral

• They are less risky for the financial institution.

• They are a higher risk loan for the lender

The cost of a secured loan is typically lower than the cost of an unsecured loan because _______.

• it requires collateral.

• the loan takes longer to get.

• it has high-interest rates

• your parents will make sure you pay it back.

To maintain a good credit score you must ______.

• manage your debt wisely.

• check your credit score every week.

• have credit monitoring

• have many open credit cards

Not managing your debt wisely can result in ________.

• An increase in your credit score

• A decrease in your credit score

• Inaccessible credit score

• No change in your credit score