Types of Credit & Modeling Functions

Each of the following is an installment loan(pay per month), except for a(n) ___________, which is a revolving line of credit(means it changes per month).

• Auto loan
• Credit card
• Mortgage
• Student loan

Keon plans to buy a new GMC Sierra for $47,000 at 5.5% APR. Which financing option would have the lowest total interest?

• 60-month term and $2,000 down payment
• 60-month term and $3,500 down payment
• 36-month term and $3,500 down payment
• 36-month term and $5,000 down payment

In order to take out federal student loans, you need to…

• Have a credit score above 600
• Complete and submit the FAFSA
• Choose a repayment plan before enrolling
• Take out at least $6000 in private student loans

Which of the following is an example of a secured debt (involves collateral)?

• A credit card
• A student loan
• An auto loan
• A personal loan from family

Which of the following best describes a Schumer box?

• The portion of your monthly credit card bill that lists the minimum monthly payment due
• The portion of your credit card agreement that lays out the important rates and fees
• The portion of your credit card application that asks for your income and employment status
• The portion of a plastic credit card that holds the magnetic stripe or chip

What is the main difference between an annual interest rate and an annual percentage rate (APR)?

• APR is the interest rate combined with guaranteed fees
• APR is almost always lower than interest rate
• Interest rate is for loans, while APR is for credit cards
• Interest rate is money you earn on investments, while APR is money you pay for debt

For most American households, the largest source of debt is:

• Student loans
• Credit cards
• Medical debt
• Mortgages

If you fall behind on your loan payments, all of the following are recommended steps, EXCEPT…

• Calling your lender to negotiate a payment plan that fits your needs
• Reducing your spending to divert additional income towards loan payments
• Putting your past due loan payments on a credit card
• Find additional sources of income to help catch up on past due payments

All of the following affect the monthly payment amount of a mortgage EXCEPT…

• Down payment
• Interest rate
• Term of the loan
• The bank that issues the mortgage

Mason takes out $2700 in Direct Subsidized student loans during their first semester of college. Which of the following statements is true?

• Their loans will immediately start accruing interest once taken out
• Their loans will start accruing interest after graduation
• Their loans will enter repayment after one year
• Their loans will enter repayment when they start their first job