How Credit Works Answers

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1
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What is collateral?

A
a type of unsecured credit
B
property given as security for a loan
C
funds borrowed to buy property
D
a payment to reduce overall debt
2
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Calvin and Trish started a cleaning company, but unfortunately their competitors offered lower prices, and the company failed. Calvin and Trish had borrowed $20,000 to start the business.What is one consequence they would face if they go through bankruptcy?

A
They will face legal charges.
B
Their credit will be impacted for several years.
C
They will be prohibited from getting a future business loan.
D
They will have to pay back the full loan along with all interest.
4

Which types of credit are most similar to each other?

A
auto loan and mortgage loan
B
auto loan and personal loan
C
credit card and mortgage loan
D
mortgage loan and personal loan
5

cashcollateralfeesinterest

A
cash
B
collateral
C
fees
D
interest
6

How is a merchant credit card different from a title loan?

A
A merchant credit card is a secured loan, while a title loan is unsecured.
B
A merchant credit card does not have a fixed interest, while a title loan does.
C
A merchant credit card is an unsecured loan, while a title loan is a secured loan.
D
A merchant credit card requires no payment, while a title loan requires a payment.
7

Lenders are prohibited from

A
considering borrowers’ race, sex, and national origin.
B
explaining to borrowers why their application was rejected.
C
using borrowers’ information in a responsible manner.
D
considering borrowers’ sources of income other than salary.
8

Interest rates on credit cards

A
can be paid annually.
B
change with the balance.
C
decrease with early payment.
D
can vary widely.
9

How do government regulators protect consumers?

A
by investigating complaints made by lenders
B
by using borrower information responsibly
C
by disclosing accurate credit terms
D
by ensuring lenders comply with the law

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