Types of Credit

When can personal loans be a better option than credit cards? (hint: choose 2 correct answers)

• If you want to earn rewards and enjoy travel benefits

• If you want a lower interest rate

• If you want purchase protection & warranties

• If you increase your credit score

If the collateral for your secured loan can be taken away, why get a secured loan at all?

• Because they usually have a lower interest rate

• Because they are easier to obtain than unsecured loans

• Because they offer more flexible repayment terms

• Because they require no collateral at all

Which of the following is NOT a typical type of credit?

• Mortgage

• Overdraft

• Credit Card

• Pre-Paid Debit Card

All of the following can happen when you fail to make a mortgage payment EXCEPT:

• After one missed payment, you can lose your home

• You will be charged fees

• Your credit score can take a hit

• Foreclosure process starts after 30 days of missed payment

Which statement is true about debit and credit cards?

• More businesses accept credit cards than debit cards

• You get a monthly statement for a credit card, but not for a debit card

• Debit cards withdraw money directly from a bank account; credit cards don't

• Credit cards withdraw money directly from a bank account; debit cards don't

True or False: A cosigner's credit history can be affected by the loan they are cosigned on.

• True

• False

• Only if the primary borrower defaults

• Only for secured loans

Why does the amount of INTEREST you owe on a loan decrease over time?

• Because the loan amount increases over time.

• With each payment, principal decreases, so interest lowers.

• Interest rates are adjusted monthly.

• Payments are made less frequently.

Which of the following is typically a SECURED loan?

• Auto Loan

• Student loan

• Credit Card Balance

• Overdraft

Which of the following is most likely a fixed-rate unsecured debt?

• Student loan

• Credit card

• Mortgage

• Auto loan

Which of the following factors will most likely INCREASE the overall cost of your loan?

• A lower interest rate

• A longer loan term

• Offering collateral to secure the loan

• Paying a higher down payment