Notes

If James defaults on a credit card and applies for an apartment, what are three difficulties he may face? : He may need a co-signer in order to be approved, his application may be denied, or he may be required to pay a higher security deposit.
______________
Sandra co-signs a car loan for Francesca. How could Sandra's credit be affected negatively?
:If Francesca defaults on the loan, Sandra will be responsible for the loan and the default will hurt her credit.
______________
Chad puts John on his credit card as an authorized user. If John does not pay for his purchases, who is responsible and why? :Chad is responsible for the payments because he is the cardholder.
______________
Give an example of a secured debt and explain why it is a secured debt. : A debt like a home loan or a car loan would be considered secure because it is backed by collateral.
______________
Give an example of an unsecured debt and explain why it is an unsecured debt. : An unsecured credit card would be considered unsecure because it is not backed by collateral.
______________
Give an example of an asset-producing debt and explain why it is an asset-producing debt.
:A home loan is an asset-producing debt because home value can appreciate over time.
______________
What factors determine the total cost of borrowing?: The amount of the down payment, the interest rate of the loan, and the length of loan will determine the total cost of borrowing. Fees will also affect the total cost.
______________
Shirley just qualified for an auto loan for $15,000. How does making a down payment affect the cost of her loan? Why?: Making a down payment will reduce the cost of her loan because the amount she takes out for the loan will be smaller and she will accrue less interest over the length of the loan.
______________
When is a shorter loan term beneficial? : A shorter loan term is beneficial when you can afford the more expensive loan payments because you will save money, as the loan will not accrue as much interest.
______________