Credit and Loans answer key

Bruce takes out a personal loan of $1,000 to go on a trip to Florida. His loan has an annual simple interest rate of 10%. When you calculate Bruce's debt, be sure to use the formula for simple interest. A = (P)(r)(t) Bruce borrowed $1,000 for his trip. If Bruce waits for five years to begin paying back his loan, how much will he owe?

$1,500

Bruce takes out a personal loan of $1,000 to go on a trip to Florida. His loan has an annual compound interest rate of 10%. The loan compounds once each year. When you calculate Bruce's debt, be sure to use the formula for annual compound interest. A = P (1+)nt Bruce borrowed $1,000 for his trip. If Bruce waits for five years to begin paying back his loan, how much will he owe?

$1,610.51

Credit Cards

Can be swiped at stores to make immediate purchases on credit

Personal Loans

Can be used to borrow a lump sum of money for an individual to use

Mortgage Loans

Can be used to borrow money to purchase a house

Auto Loans

Can be used to obtain the funds to buy a vehicle

A loan that is associated with a valuable asset that can be taken by the lender is

a secured loan

Jack agrees to take out a mortgage. If he fails to make his payments, the bank may repossess his house, so his loan is .

a secured loan

Ray needs to get a new set of tires for her car, so she uses her credit card. If she does not pay her bills, there is no asset that can be seized. This means her loan is

an unsecured loan

Which of the following are more likely to happen if you have bad credit? Check all that apply.

being denied a mortgage being denied an unsecured credit card having to pay higher interest rates on loans

Filing for bankruptcy can - debt.

eliminate

A major consequence of bankruptcy is that it can - an individual's chances of receiving additional credit.

harm