Types of credit Bell Ringer 5

Antonio has $4000 saved to use for a down payment, and he’s about to buy a car that costs $29,000. How much would you expect his loan principal to be?

• $4000

• $25,000

• $33,000

• $29,000 x his interest rate

If you were offered two auto loan options with the same principal and interest rate, but one was a 48-month loan and one was a 72-month loan, which outcome below will reflect the impact of that difference in term?

• The 48-month loan will cost less money overall

• The 48-month loan will have lower monthly costs

• The 48-month loan will take longer to pay off

• The 48-month loan will always be a better choice

Shonda’s mom recommends that she spend a year building her credit history and boosting her credit score before she applies for a loan to buy her dream car, which costs $54,000. Why is that good advice?

• A good credit score will reduce her down payment

• A good credit score will reduce her principal

• A good credit score will reduce her interest rate

• A good credit score will allow her to pay the full $54,000 in cash

An excellent credit score will help with which aspect of car financing?

• Bargaining for a great sales price

• Receiving a large down payment

• Qualifying for a low interest rate

• Having a wide selection of term lengths

Taylor is about to go car shopping, and she has $5000 saved that she can use for a down payment while still having extra cash in her emergency fund. She expects the exact model car she’s looking for to cost $35,000. If her top priority is having the lowest monthly payments possible, which advice should she follow?

• Put in $0 for your down payment, and choose a loan with a short term length

• Put in $2500 for your down payment, and choose a loan with a short term length

• Put in $3500 for your down payment, and choose a loan with a long term length

• Put in $5000 for your down payment, and choose a loan with a long term length

If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice?

• Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help

• Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

• Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms

• Explore whether a free or non-profit credit counseling service could help

Which of the following is most likely to represent a fixed rate, secured debt?

• A student loan

• A credit card

• A prepaid debit card

• An auto loan