PF Chapter 3 LESSON 2 Sources and Types of Credit

What is revolving credit?

• A loan for a fixed amount of money that’s paid back in monthly installments

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

• A legal claim against an asset until the debt is repaid

• An asset that increases in value over time

What is collateral?

• A loan for a fixed amount of money that’s paid back in monthly installments

• An asset that increases in value over time

• Something owned (that has value) offered as security on a debt

• A lender who uses deceptive practices on borrowers

What is a lien?

• A legal claim against an asset until the debt is repaid

• An asset that loses value over time

• The increase in value of a home over time

• Failure to repay a loan on time

What is an appreciating asset?

• An asset that loses value over time

• An asset that increases in value over time

• A loan for a fixed amount of money that’s paid back in monthly installments

• Credit that automatically renews whenever a payment is made

What is equity in terms of home ownership?

• The difference between the amount owed and what the home could be sold for

• A legal claim against an asset until the debt is repaid

• An asset that loses value over time

• Credit that automatically renews whenever a payment is made

What does it mean to default on a loan?

• To offer something owned as security on a debt

• To fail to repay a loan on time

• To have a legal claim against an asset

• To have an asset that increases in value over time

What is installment credit?

• Credit that automatically renews whenever a payment is made

• A loan for a fixed amount of money that’s paid back in monthly installments

• An asset that increases in value over time

• A legal claim against an asset until the debt is repaid

What is a depreciating asset?

• An asset that increases in value over time

• An asset that loses value over time

• A loan for a fixed amount of money that’s paid back in monthly installments

• Credit that automatically renews whenever a payment is made

What is predatory lending?

• A lender who uses deceptive, unfair, or fraudulent practices on borrowers

• A legal claim against an asset until the debt is repaid

• An asset that increases in value over time

• Credit that automatically renews whenever a payment is made

Which of the following is an example of a depreciating asset?

• A house that increases in value over time

• A car that’s worth less every year

• A savings bond that gains interest

• A piece of art that appreciates in value