Credit Intro

What is the definition of credit?

• when the consumer knows that money today is worth more than money tomorrow

• when the borrower receives something of value now and agrees to repay the lender at some date in the future

• when the borrower is able to use the rule of 72 to see when their investment will double

• when the borrower has to defer or default on a loan

What is an example of a bad lender?

• credit card companies

• buisnesses

• banks

• pawnshops

Why are some lenders considered bad?

• they charge high interest rates

• they use collateral

• they do not have to follow state and federal regulations

• all of the above

Who is a typical borrower from a Finance company/Consumer Finance Company?

• a person with a good credit score

• a person with a bad credit score

• good lenders

• bad lenders

Why is important to comparison shop on multiple lenders?

• you want to find the best deal- especially with high interest rates

• you want to be able to avoid bad lenders

• some lenders may be fake

• you want to find the highest interest rate

What does it mean to make a deferment on a loan?

• you only have to pay back half of the original loan amount

• you do not have to pay the loan back anymore

• you can temporarily stop making payments

• you can get the interest rates on the loan lowered

What does it mean to default on a loan?

• to temporarily stop making payments

• to double the time you have to pay the loan back

• to declare bankruptcy

• failure to pay back the loan

If you change your address, what must you make sure you do?

• notify the lender about the change in address

• defer your loan

• default on your loan

• hire a financial advisor

What is APR?

• the interest rate

• the principal

• the interest charged that represents the ACTUAL yearly cost of the loan

• the finance charge

What is a fixed interest rate?

• a rate that changes sometimes

• a rate that changes only when the FED changes interest rates

• a rate that never changes

• a rate that only increases