Types of Loans

8 Questions

Match the following types of loans with their descriptions:

Car loans = Used for purchasing a vehicle Student loans = Taken out to cover educational expenses Home mortgages = Used to purchase a property Personal loans = Can be obtained for various personal purposes

Match the following loan terms with their definitions:

Principal amount = The original amount of money borrowed Interest = Additional amount paid for the privilege of borrowing money Unsecured loan = A loan not backed by collateral Credit history = Record of a borrower's responsible repayment of debts

Match the following loan characteristics with their descriptions:

Easy to get personal loans = Available at most banks and can be spent as desired Types of loans = Include car loans, student loans, and home mortgages Average credit history = Makes it fairly easy to obtain unsecured personal loans Bank loans = Money borrowed from a bank or financial institution

Match the following loan benefits with their descriptions:

Flexibility of personal loans = Can be used for vacations, purchases, or other personal expenses Home mortgages benefit = Enables the purchase of real estate property Student loans benefit = Used to cover educational expenses and support higher education pursuits Car loans benefit = Facilitates the purchase of a vehicle

Match the following loan types with their key considerations:

Personal loans = Unsecured and easier to obtain with higher interest rates Cash advances = Easy to get but come with extremely high interest rates Student loans = Common and offer reasonable interest rates Mortgage loans = Secured by the purchased property with tax-deductible, fairly low interest rates

Match the following loan types with their typical amounts and usage:

Personal loans = Small amounts not exceeding $5,000 Cash advances = Usually for small amounts and should only be considered when no alternative ways to get money exist Student loans = Can lead to substantial debt for recent graduates Mortgage loans = Typically the biggest loans, enabling individuals to buy homes

Match the following loan types with their collateral requirements:

Personal loans = Often unsecured Cash advances = No specific collateral requirement Student loans = No specific collateral requirement Mortgage loans = Secured by the purchased property

Match the following loan types with their tax implications and interest rates:

Personal loans = Higher interest rates than secured loans Cash advances = Extremely high interest rates Student loans = Offer reasonable interest rates Mortgage loans = Fairly low interest rates and tax-deductible

Study Notes

Types of Loans and Key Considerations

Personal loans are often unsecured and easier to obtain with an average credit history, typically for small amounts not exceeding $5,000, but with higher interest rates than secured loans.
Cash advances are easy to get but come with extremely high interest rates, usually for small amounts, and should only be considered when no alternative ways to get money exist.
Student loans, such as Stafford and Perkins loans, are common and offer reasonable interest rates, but can lead to substantial debt for recent graduates.
Mortgage loans are typically the biggest loans, secured by the purchased property, and enable individuals to buy homes with structured terms and tax-deductible, fairly low interest rates.
Home-equity loans and lines of credit allow homeowners to borrow against their house equity for home additions, improvements, or debt consolidation, with tax-deductible, fairly low interest rates.
Small business loans are available from local banks and require more work, often needing a business plan and personal assets as collateral in case the business fails.