5.1 Intro to Credit Review

Amount you are borrowing is the ____________.

• Principal

• Interest

• Term

• Loan

• Percent

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

• Principal

• Interest

• Term

• Loan

• Percent

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

• Principal

• Interest

• Term

• Loan

• Percent

What are the main advantages of a secured loan? (choose 2)

• Requires collateral which the lender can take if you don't pay, so it's safer for the lender

• Higher interest rates

• Does not require collateral so it is more risky for the lender, so it's more risky for the lender

• Lower interest rates

What are the main advantages of a unsecured loan? (choose 2)

• Requires collateral which the lender can take if you don't pay, so it's safer for the lender

• Higher interest rates

• Does not require collateral so it is more risky for the lender, so it's more risky for the lender

• Lower interest rates

What is an example of an item that could be used as collateral for a secured loan? Choose all that apply.

• House

• Phone

• Car

• Boat

• Air Jordans

What factors determine the interest rate that will be charged for money borrowed when using credit? Choose all that apply.

• Credit Score (higher score = lower interest rate)

• Loan itself (higher principal and longer term = higher interest rate)

• Living situation

• Employment history

• Amount of kids you have

What is a cosigner?

• The bank teller who signs you up for the loan

• Your financial advisor

• Someone who you receives the loan money you took out

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

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.

• longest/ highest

• shortest/highest

• longest/lowest

• shortest/lowest

________________ 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.

• Installment Loans

• Revolving Credit

• Secured Debt

• Unsecured Debt

• Variable Rate