Categorizing Credit

Revolving Credit is:

• Used for a specific purchase

• An open line of credit

• Tied to a specific asset

• Has a fixed interest rate.

Secured Debt requires:

• No collateral

• A specific asset as collateral

• A variable interest rate

• An open line of credit.

Unsecured Debt is characterized by:

• A) Collateral requirement

• B) No collateral

• C) Fixed interest rate

• D) Specific purchase financing.

Fixed-Rate loans are known for having interest rates that:

• Change with the market

• Remain constant during the loan duration

• Require no collateral

• Are tied to a specific asset.

Fill in the blank: Revolving Credit is an open line of credit that can be used for any purchases as long as you’re under the ____.

• A) Interest rate

• B) Credit limit

• C) Collateral

• D) Principal

Fill in the blank: Secured Debt is tied to a specific asset that can be used as collateral and repossessed if the borrower doesn’t make ____.

• A) Purchases

• B) Payments

• C) Investments

• D) Loans

Which type of credit is used to finance a specific purchase for a specific amount of time?

• Revolving Credit

• Installment Loans

• Unsecured Debt

• Variable-Rate

Which type of credit does not require collateral?

• Secured Debt

• Installment Loans

• Unsecured Debt

• Fixed-Rate

Which type of credit allows you to borrow up to a certain limit and pay it back over time?

• Revolving Credit

• Installment Loan

• Fixed Rate

• Secured Debt

What is a common characteristic of secured debt?

• It is backed by collateral

• It has a variable interest rate

• It is always unsecured

• It is a type of revolving credit.