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Worksheets5.1 Intro to Credit Review
Total questions: 20
Worksheet time: 20mins
Amount you are borrowing is the ____________.
Principal
Interest
Term
Loan
Percent
Percentage (usually per year) you are being charged for the right to borrow the money is the ____________.
Principal
Interest
Term
Loan
Percent
The amount of time over which you pay back your principal and interest is the ____________.
Principal
Interest
Term
Loan
Percent
What are the main advantages of a secured loan? (choose 2)
Requires collateral which the lender can take if you don't pay, so it's safer for the lender
Higher interest rates
Does not require collateral so it is more risky for the lender, so it's more risky for the lender
Lower interest rates
What are the main advantages of a unsecured loan? (choose 2)
Requires collateral which the lender can take if you don't pay, so it's safer for the lender
Higher interest rates
Does not require collateral so it is more risky for the lender, so it's more risky for the lender
Lower interest rates
What is an example of an item that could be used as collateral for a secured loan? Choose all that apply.
House
Phone
Car
Boat
Air Jordans
What factors determine the interest rate that will be charged for money borrowed when using credit? Choose all that apply.
Credit Score (higher score = lower interest rate)
Loan itself (higher principal and longer term = higher interest rate)
Living situation
Employment history
Amount of kids you have
What is a cosigner?
The bank teller who signs you up for the loan
Your financial advisor
Someone who you receives the loan money you took out
Someone who agrees to take on the responsibility of repayment if the loan goes unpaid.
In Shady Sam, you were asked to maximize profits as the loan shark.
The loans that were most profitable tended to have the ______________ terms and the ________________ monthly payments.
longest/ highest
shortest/highest
longest/lowest
shortest/lowest
________________ are/is used to finance a specific purchase for a specific amount of time. Regular payments are made to pay the interest and the principal.
Installment Loans
Revolving Credit
Secured Debt
Unsecured Debt
Variable Rate
________________ are/is an open line of credit that can be used for any purchases as long as you’re under the credit limit. Payment amounts vary each pay period based on the size of the debt.
Installment Loans
Revolving Credit
Secured Debt
Unsecured Debt
Variable Rate
________________ are/is debt is tied to a specific asset that can be used as collateral and repossessed if borrower doesn’t make payments
Installment Loans
Revolving Credit
Secured Debt
Unsecured Debt
Variable Rate
________________ are/is debt is not tied to a specific asset; there is no collateral that can be repossessed if borrower defaults
Installment Loans
Revolving Credit
Secured Debt
Unsecured Debt
Variable Rate
________________ are/is interest rate can change during the duration of the loan based on the prime rate or an index rate.
Installment Loans
Revolving Credit
Secured Debt
Variable Rate
Fixed-Rate
________________ are/is interest rate remains constant during the duration of the loan
Installment Loans
Revolving Credit
Secured Debt
Variable Rate
Fixed-Rate
An auto loan is which of the following? Choose all that apply.
Installment loan
Revolving Credit
Secured Debt
Unsecured Debt
A credit card is which of the following? Choose all that apply.
Installment loan
Revolving Credit
Secured Debt
Unsecured Debt
A mortgage is which of the following? Choose all that apply.
Installment loan
Revolving Credit
Secured Debt
Unsecured Debt
A personal loan is which of the following? Choose all that apply.
Installment loan
Revolving Credit
Secured Debt
Unsecured Debt
Why do people sometimes use credit to pay for items instead of just using cash? Choose all that apply.
Build their credit history
Too young/old to use cash
Need to purchase a big ticket item they do not have cash for
Want the safety or rewards that come along with credit cards
Credit it free and then they can save their cash
