Questions and Answers
What is a benefit of obtaining a personal loan?
Getting large amounts of money to use immediately
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.
What happens to consumers who pay more than the minimum payment on credit cards?
They pay less interest in the long run.
A credit score is based in part on?
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What best determines whether a borrower's investment on an adjustable rate loan goes up or down?
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Filing for bankruptcy can make it hard for a consumer to reestablish and obtain?
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A way to build good credit is?
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Simple interest is paid only on the?
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An example of secured credit is a?
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Which describes an example of using unsecured credit?
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Study Notes
Personal Loans
- Benefit of personal loans includes access to large amounts of money for immediate use.
Secured vs Unsecured Credit
- Secured credit is tied to an asset that can be claimed if the loan is defaulted, whereas unsecured credit lacks physical collateral.
Credit Card Payments
- Making payments above the minimum on credit cards reduces overall interest paid over time.
Credit Score Components
- A credit score is influenced by factors such as payment history and total debt outstanding.
Adjustable Rate Loans
- The fluctuation of an adjustable rate loan's investment value is primarily dictated by market conditions.
Bankruptcy and Credit
- Filing for bankruptcy can severely impact a consumer's ability to regain and establish new lines of credit.
Building Good Credit
- Establishing a solid credit history can be achieved through punctual bill payments.
Simple Interest
- Simple interest on loans applies solely to the original principal amount borrowed, not compounding on additional amounts.
Examples of Secured Credit
- A common form of secured credit is a mortgage, where the property serves as collateral.
Examples of Unsecured Credit
- Purchasing items, such as home gutters, using a credit card illustrates an example of utilizing unsecured credit.
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Description
This quiz covers essential personal finance topics, including personal loans, credit types, and credit scores. Test your knowledge on how to manage credit and loans effectively, alongside the impact of financial decisions on credit history and scores.
