Unit 3 Types of Credit

Overview

Students will be able to

• Correctly use fundamental vocabulary related to credit and lending

• Explain how loan amortization and payments work

• Understand how principal, interest rate, and term are critical components to evaluating credit options

• Explain how a credit card works in terms of making purchases and managing payments

• Read a Schumer box and identify how terms of the card impact total cost of purchases

• Understand how interest is charged and how to avoid or minimize it

• Read a credit card statement

• Establish criteria for choosing a credit card, based on the factors important to their needs

• Recognize and avoid marketing schemes that might lead to bad decisions

• Identify alternative routes to establishing credit, aside from opening their own credit card account

• Explain the fundamental features of a personal loan, including where to find one and how to apply

• Explore the peer-to-peer lending market as an alternative to traditional banks

• Understand the potential pitfalls of borrowing from family and friends, a personal 401(k), or a payday lender

• Utilize knowledge and strategies to get the best possible financing terms (that meet their individual needs and budget) for a new or used car

• Explain the difference between a car loan and lease as well as advantages and disadvantages of each

• Have a backup plan if they find themselves unable to afford their car payments

• Make informed decisions about how much student loan debt to take on, based on college costs and projected salary upon graduation

• Explain the difference between private and Federal loans, and the various types of Federal loans, and when to use each

• Select the best repayment option to minimize total amount paid while also keeping monthly payments reasonable within a budget

• Learn strategies for avoiding default, including whether consolidation is an appropriate option

• Understand how down payment, interest rate, term, loan type, and amortization table work together to impact overall mortgage payments

• Recognize the pros and cons of fixed- and adjustable-rate mortgages

• Determine whether a home equity loan or line of credit is a viable loan option

• Decide whether renting or buying makes the most sense