Question

1. match the examples and descriptions with the types of consumer credit. answers will be used more than once. a common example of this form of credit is the purchase of a vehicle. this is a short-term extension of credit that is due in one lump sum before the end of the credit period. this form of credit can be used to purchase any good or service. revolving open-end credit this is a single specified amount of money lent to a consumer, usually for the purchase of a designated kind of good. noninstallment credit this is a line of credit a lender extends that is not tied to the cost of goods, but is limited to the debtor’s credit history and ability to repay debts. installment closed-end credit this is the most common form of credit for credit cards. a common example of utilizing this form of credit is quickly purchasing high demand real estate.

Explanation:

• A common example of this form of credit is the purchase of a vehicle: Installment closed-end credit is for a fixed amount for a specific purchase, repaid in installments (e.g., auto loans).
• This is a short-term extension of credit that is due in one lump sum before the end of the credit period: Noninstallment credit requires full repayment in one sum by a deadline (e.g., utility bills paid late).
• This form of credit can be used to purchase any good or service: Revolving open-end credit (e.g., credit cards) allows flexible spending on various items.
• This is a single specified amount of money lent to a consumer, usually for the purchase of a designated kind of good: Installment closed-end credit provides a fixed amount for a specific purchase (e.g., vehicle/equipment loans).
• This is a line of credit a lender extends that is not tied to the cost of goods, but is limited to the debtor’s credit history and ability to repay debts: Revolving open-end credit is an unsecured line of credit based on creditworthiness (e.g., credit cards).
• This is the most common form of credit for credit cards: Revolving open-end credit is the standard structure for credit cards (reusable line of credit).
• A common example of utilizing this form of credit is quickly purchasing high demand real estate: Installment closed-end credit (e.g., mortgages) is used for specific large purchases like real estate.

Answer:

1. A common example of this form of credit is the purchase of a vehicle: installment closed-end credit
2. This is a short-term extension of credit that is due in one lump sum before the end of the credit period: noninstallment credit
3. This form of credit can be used to purchase any good or service: revolving open-end credit
4. This is a single specified amount of money lent to a consumer, usually for the purchase of a designated kind of good: installment closed-end credit
5. This is a line of credit a lender extends that is not tied to the cost of goods, but is limited to the debtor’s credit history and ability to repay debts: revolving open-end credit
6. This is the most common form of credit for credit cards: revolving open-end credit
7. A common example of utilizing this form of credit is quickly purchasing high demand real estate: installment closed-end credit