Types of Credit Flashcard

Front

Which of the following is an example of an installment loan? Credit card, Mortgage loan, Personal line of credit, Store card

Back

Mortgage loan

Front

A credit card is an example of which type of credit?

Back

Revolving credit

Front

Which of the following best describes revolving credit? A loan that must be paid in full each month, A line of credit that can be used repeatedly as long as the balance is paid down, A credit product tied to an asset, like a house or car, A loan with a fixed payment amount every month

Back

A line of credit that can be used repeatedly as long as the balance is paid down

Front

Which of the following is typically secured debt? Credit card balance, Car loan, Personal loan, Medical debt

Back

Car loan

Front

Which of the following is true about unsecured debt? It requires collateral to secure the loan, It is backed by an asset, like a home or car, It is not backed by any collateral, It offers lower interest rates than secured debt

Back

It is not backed by any collateral

Front

A loan with a set interest rate for the entire term is known as:

Back

Fixed-rate loan

Front

Which of the following types of debt typically carries higher interest rates?
Secured debt, Unsecured debt, Fixed-rate loans, Installment loans

Back

Unsecured debt

Front

A person takes out a loan to purchase a house. The lender has the right to foreclose on the house if the borrower fails to make payments. This is an example of:

Back

Secured debt

Front

Which type of credit allows the borrower to access funds up to a certain limit and pay only the interest on the balance?

Back

Line of credit

Front

A student loan with a predetermined monthly payment is an example of which type of credit?

Back

Installment loan