Semester Course - Ms. McRae's Classes - Home



Semester Course5.1 Intro to CreditStudent Activity PacketName: In this lesson, you will learn to: Explain why a person may need or want creditIdentify the major types of credit and their characteristics Understand and correctly use the three basic components of lines of credit: principal, interest rate, and termResourcesQuestions1 Think about these questions.Do not type answers.Estimated time: 5 minsHave you ever borrowed from or lent money to someone? Who did the loan involve?What was the agreement for repayment?Did it work out the way you anticipated?Were both people happy at the end? 2Loan BasicsPerhaps you’ve casually lent or borrowed money from a friend before. But more formal loan arrangements from a financial institution come with far more terms you must understand in order to get a fair deal. Watch this video and then answer the questions. Estimated time: 8 minsDefine:Principal?interesttermWhat is a: secured loanMain advantages unsecured loanMain advantagesList two examples of items that could be used as collateral for a secured loan.What factors determine the interest rate that will be charged for money borrowed when using credit?What is a cosigner and what considerations should they make before co-signing a loan?What is a: variable rate loanAdvantages/DisadvantagesFixed rate loanAdvantages/disadvantages3ANALYZE: Categorizing CreditNow that you know the fundamentals of credit, let’s dive in deeper to categorize some popular forms of credit. Follow the directions on the worksheet to complete the activity.Estimated time: 17 minsComplete on a separate document4Shady SamIn this short game, you get to play the role of loan shark, trying to make the most profit off of borrowers’ interest payments. Play the game and then answer the following questions. Estimated time: 10 minsAs the game says, most borrowers only pay attention to the monthly payment when taking out a loan. Why do you think this is? What was your final score in the game?You probably noticed a pattern that allowed you to maximize profits. Complete this sentence by circling or highlighting one term: The loans that were most profitable tended to have the shortest / longest terms and the lowest / highest monthly payments.5Exit TicketEstimated time: 5 mins List two reasons someone would want access to credit. Which of these words refers to the length of time you have to pay off an installment loan? PrincipalTermInterest rateDescribe how a secured loan is different from an unsecured loan. ................
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