Foundations in Personal Finance Chapter 4 Credit and Debt

Credit that automatically renews whenever a payment is made to reduce the debt.

• What is Revolving Credit?

• What is Secured Loan?

• What is Unsecured Loan?

• What is Personal Loan?

Answer explanation

Credit Cards are revolving loans.

Something owned (that has value) offered as security on a debt; if the debt is not repaid as agreed, the item is forfeited to the lender.

• Collateral

• Asset

• Lien

• Equity

Answer explanation

Car or House is collateral.

A legal claim (or right to own) against an asset under the debt (loan) is repaid.

• What is Lien?

• What is Collateral?

• What is Asset?

• What is Equity?

Answer explanation

Mortgage is financial lien against property.

An asset that increases in value over time.

• What is Appreciating Asset?

• What is Equity?

• What is Depreciating Asset?

• What is Interest?

Answer explanation

House, Classic Cars, Collector's Items, or Art can be appreciating assets.

Tags

CCSS.HSF.BF.A.1

CCSS.HSF.BF.A.2

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

The increase in value of a home over time; the difference between the amount owed and what the home could be sold for.

• What is Equity?

• What is Asset?

• What is Collateral?

• What is Lien?

Answer explanation

Appraised Value of Home minus Remaining Loan Amount equals Equity. $100,000 - $60,000 = $40,000 in Equity. (It is a way to measure profit in a house.)

Tags

CCSS.HSA.CED.A.2

CCSS.HSA.SSE.A.1

CCSS.HSF.BF.A.1

CCSS.HSF.IF.B.4

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

Failure to repay a loan on time.

• What is Default?

• What is Installment Payment?

• What is Depreciating Balance?

• What is Predatory Lending?

Tags

CCSS.RI.11-12.5

CCSS.RI.6.5

CCSS.RI.7.5

CCSS.RI.8.5

CCSS.RI.9-10.5

A loan or fixed amount of money that's paid back in monthly installments.

• What is Installment Credit?

• What is Depreciating Asset?

• What is Predatory Lending?

• What is Revolving Credit?

Answer explanation

Car Loans and Student Loans are types of Installment Credit.

Tags

CCSS.RI.11-12.5

CCSS.RI.6.5

CCSS.RI.7.5

CCSS.RI.8.5

CCSS.RI.9-10.5

An asset that loses value over time, such as a car that's worth less every year.

• What is Depreciating Asset?

• What is Default Asset?

• What is Appreciating Asset?

• What is Collateral Asset?

Answer explanation

Cars, Computers, Cell Phones and Heavy Equipment are types of depreciating assets.

Tags

CCSS.RF.3.3B

CCSS.RF.3.3C

CCSS.RF.3.3D

CCSS.RF.4.3A

CCSS.RF.5.3A

A lender who uses deceptive, unfair, or fraudulent practices on borrowers who are desperate for cash.

• What is Predatory Lending?

• What is Scavenger Lending?

• What is Default Lending?

• What is Depreciating Lending?

Answer explanation

Loan Sharks, Payday Loans, and Title Pawns are types of predatory loans.

Tags

CCSS.RI.11-12.5

CCSS.RI.6.5

CCSS.RI.7.5

CCSS.RI.8.5

CCSS.RI.9-10.5

A statistical number used to represent a consumer's creditworthiness.

• What is Credit Score?

• What is Credit Bureau?

• What is Loan Report?

• What is Loan Rating?

Answer explanation

Credit Scores are based on debt and scores range from 300 to 850.

Tags

CCSS.RI.11-12.5

CCSS.RI.6.5

CCSS.RI.7.5

CCSS.RI.8.5

CCSS.RI.9-10.5