Intro to Credit and using Credit Cards

3 Components of a loan are...

• The money you pay, the money the lender pays, and the principal

• The mortgage, the auto loan, and the small business loan

• The principal, the interest rate, and the loan term

• The loan amount, the credit card payment, and the statement

Why are secured loans considered less risky to the lender?

• Lenders are allowed to conduct background checks for secured loans

• Lenders can take valuable collateral if you fail to repay your loan

• Lenders give secured loans all the time, so they're more comfortable doing them

• Lenders can check your credit score before giving a secured loan, which they can't do for an unsecured loan

Having a good credit score, making a larger down payment, and finding a cosigner with good credit are all ways to…

• Decrease your principal

• Decrease your interest rate

• Increase your term

• Increase your total payments

Each of these statements describes a variable rate loan EXCEPT...

• Typically starts with a lower interest rate than a fixed rate loan

• Is riskier to the borrower because the interest rate could increase substantially

• Is almost always a better option

• Can increase or decrease the interest rate over the course of the loan

Which word represents the total cost of the item you’re purchasing on credit minus any down payment you make upfront?

• Principal

• Rate

• Term Length

• ARM

Each of the following represents an installment loan EXCEPT…

• Home Mortgage

• Auto Loan

• Credit Card

• Student Loan

A loan for a house, known as a mortgage, is:  (select all that apply)

• Unsecured Loan

• Revolving Loan

• Installment Loan

• Line of Credit Loan

Auto Loan

• Secured Loan

• Unsecured Loan

Auto Loan

• Installment Loan

• Revolving Loan

Payday Loan

• Fixed Rate

• Variable Rate