Credit and Loans

The simple interest on a loan of $200 at 10 percent interest per year is: $10 per year until the loan is paid off. $15 per year until the loan is paid off. $20 per year until the loan is paid off. $25 per year until the loan is paid off.

$20 per year until the loan is paid off.

What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate? $10.00 $21.00 $33.10 $46.41

$33.10

Both mortgages and auto loans: are riskier for lenders. are riskier for borrowers. require a down payment in general. require minimum payments.

(not) are riskier for borrowers

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? $1,200 $1,300 *$1,500 $1,800

*$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? $1,251.10 $1,310.21 *$1,610.51 $1,810.71

*$1,610.51

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 getting a great interest rate on a car loan having a strategy for dealing with a financial emergency

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

What best determines whether a borrower's investment on an adjustable rate loan goes up or down? a fixed interest rate a bank's finances a market's condition a person's finances

A market's condition

In determining whether to issue a loan, banks are not allowed to ask about an applicant's: employment history. date of birth. country of origin. income tax returns.

Country of origin

Filing for bankruptcy can make it hard for a consumer to reestablish and obtain ______.

Credit

The chart shows a range of credit scores. A credit score between 500 and 600 means a consumer would most likely: find it easy to get a loan. find it hard to get a loan. get a loan with low payments. get a loan with low interest.

Find it hard to get a loan.

What is a benefit of obtaining a personal loan? getting money with special repayment terms getting money with favorable interest rates getting small amounts of money to use immediately getting large amounts of money to use immediately

Getting large amounts of money to use immediately

An example of secured credit is a: payday loan. credit card. mortgage. medical bill.

Mortgage

People who want to buy a house typically ask the bank for a ________ over a 10- to 30-year period.

Mortgage

Consumers who pay more than the minimum payment on credit cards: pay less interest in the long run. are able to buy more things. see their credit scores decrease. qualify for mortgages.

Pay less interest in the long run.

A way to build good credit is: using only secured loans. taking out many lines of credit. paying bills when they are due. using only credit cards.

Paying bills when they are due.

A credit score is based in part on: employment and race. income and location. employment and trust. payment history and total debt.

Payment history and total debt.

Simple interest is paid only on the _________ ________.

Principal borrowed

Which describes the difference between secured and unsecured credit? Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object. Unsecured credit is backed by an asset equal to the value of a loan, while secured credit is not guaranteed by a material object. Secured credit is risky because banks cannot seize assets, while unsecured credit is less risky because it is backed by material objects. Unsecured credit enables lenders to seize an asset if a loan is not paid, while secured credit prohibits lenders from taking material objects.

Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.

Which describes the difference between simple and compound interest? Simple interest is paid on small, short-term loans, while compound interest is paid on large, long-term loans. Simple interest is paid on the principal, while compound interest is paid on the principal and interest accrued. Simple interest is paid on large, long-term loans, while compound interest is paid on small, short-term loans. Simple interest is paid on the principal and interest accrued, while compound interest is paid only on the principal.

Simple interest is paid on the principle, while compound interest is paid on the principal and interest accrued.

Which describes an example of using unsecured credit? Someone buys new gutters for a home with a credit card. Someone buys a new vehicle with a loan from a car dealer. Someone buys a new home with a mortgage from a bank. Someone buys a new boat with a loan from a boat dealer.

Someone buys new gutters for a home with a credit card.

Use what you have learned about managing credit to complete these sentences. Filing for bankruptcy can eliminate debt. A major consequence of bankruptcy is that it can harm an individual's chances of receiving additional credit.

eliminate/ harm

The type of credit people are most likely to use for small purchases during their lifetime is: a credit card. a personal loan. an auto loan. a mortgage.

A credit card

For which buyer would a lender most likely approve a $200,000 mortgage? a person with a credit score of 800 with a large amount of debt who has recently switched to a lower-paying job a person with a credit score of 760 with a small amount of debt who has had steady employment for many years a person with a credit score of 650 with a large amount of available credit who has a low-paying, but steady job a person with a credit score of 600 with a small amount of available credit who has recently switched to a high-paying job

A person with a credit score of 760 with a small amount of debt who has had steady employment for many years.

Which best describes a way people can use personal loans? to buy a house to buy a bicycle to pay for college to pay for groceries

To pay for college

Use what you have learned about secured and unsecured loans to complete these sentences. A loan that is associated with a valuable asset that can be taken by the lender 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. 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

a secured loan/an unsecured loan/an unsecured loan