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WorksheetsDebt and Credit
Total questions: 20
Worksheet time: 5mins
What is "Credit"?
A reward for having a high credit score
the ability to borrow money with the understanding that you'll pay later
All Answers are correct
A measure of net worth
"Interest" is:
The cost of borrowing the principal of a loan - usually a percentage
The grace period of a loan term
a one time fee you pay when you borrow money
The principal you borrow plus the Annual Percentage Yield on a loan
Credit is a way for you to:
Buy now, pay later
Stay out of debt
own a Tangible Asset
All answers are correct
Cash equals Credit
True
False
Which of the following are types of Consumer Loans
Mortgages
Auto Loans
Credit Cards
All Answers are correct
Finish this sentence: If we are to understand CREDIT, we must first understand ___________
Debt
APR
Loan Process
Interest
What are the FOUR types of Debt?
Secured, Unsecured, Rotating, Non-Rotating
Secured, Unsecured, Personal, Business
Secured, Unsecured, Revolving, Non-Revolving
Home Loans, Lines of Credit, Credit Cards, Auto Loans
"Secured Debt" means:
Money backed by Credit
Money backed by Line of Credit
Money backed by collateral
Money backed by promise to pay
The following is/are TRUE related to UNSECURED DEBT
There is NO COLLATERAL
There is COLLATERAL
Typically you will pay LOWER INTEREST
The borrower has pledged something of value to back up the loan
What is "Collateral"?
The interest rate you pay on a loan
The assets which are pledged as security for a loan.
Money received in a line of credit
The promise to pay back a loan
REVOLVING Credit can only be used ONCE
True
False
Revolving Credit allows the borrower to:
Borrow up to the maximum amount again and again until the account is closed
Use for anything they want, not just for one thing
All answers are correct
borrow up to the limit as they wish
An example of a SECURED REVOLVING CREDIT would be:
Home Equity Line of Credit
Student Loan
None of the answers are correct
Mortgage
And example of an UNSECURED REVOLVING CREDIT would be:
Mortgage
Car Loan
Student Loan
Credit Card
Revolving Credit can be either Secured or Unsecured
True
False
A "Line of Credit is" is:
A choice of what you will use for collateral
the interest percentage (APR) you pay on a credit card
A preset borrowing limit that can be tapped into any time
All Answers are correct
Unsecured Credit:
Is Riskier for the LENDER
Usually results in a HIGHER INTEREST RATE
Means the BORROWER doesn't need collateral to secure the loan
All answers are correct
"Creditworthiness" is a:
a lender's assessment of how likely an individual is to repay debts on time
how much the lender can ask for in collateral from the borrower
an assessment of how much money you have in the bank
measure of how much credit you have used in the past
If you finance a car, and the car is your collateral, this is an example of:
A REVOLVING UNSECURED LOAN
A REVOLVING, SECURED LOAN
A NON-REVOLVING SECURED LOAN
A NON-REVOLVING, UNSECURED LOAN
If we use CREDIT, we INCUR:
Wealth
Collateral
APY
Debt
