1. Credit basics Advanced Level

2. Today in Personal Finance • Students will learn to identify the 3 main categories of Credit • Notes/Chart and PowerPoint • 7 Steps for Buying a Car Activity – Packet due next class • Exit Ticket • Next Class: • Quiz on Credit Basics • Credit Scores and Reports

3. Your Present Self Impacts Your Future Self Credit availability depends on if lenders trust you will pay back the loan as agreed.

4. Types of Credit Brainstorm with your table partners and come up with as many different types of credit or loans you can think of? What do you already know about them? Where do you get them?

5. Types of Credit • 3 Types • Closed-ended Credit • Open-ended Credit • Alternative Credit

6. Credit Sources • Insurance agents • Pawn shops What credit sources provide the most favorable terms?

7. Credit can be…

8. Managing Credit Responsibly Evaluate the Purpose Even if the loan provides long-term benefits, the credit terms should still be favorable

9. Managing Credit Responsibly Consider Your Options Benefits:

10. Managing Credit Responsibly Evaluate the contract A contract outlines how and when you will pay the money back

11. Amount You Borrow Housing payments are not included as a part of the monthly 10% Why should individuals limit their debt?

12. Closed-End Credit(Installment)

13. ExampleClosed-end or installment credit Toby applied for a $10,000 automobile loan at 8%. He signs a contract with the lender to pay $313.36 per month for 36 months to repay the loan. Toby could pay more than $313.36 per month to pay off the loan earlier, but he must pay at least $313.36 per month.

14. Open-End Credit(Revolving) Did Toby have closed-end or open-end credit?

15. ExampleOpen-end or Revolving credit Whitney charged $200 to her credit card with a 13% interest rate. She receives her credit card bill with a $20 minimum payment. Whitney has many options for paying back the $200 as long as she makes the minimum payment.

16. Alternative credit

17. Types of Alternative CreditPayday Loan Short-term loan that provides immediate cash by securing a borrower’s written check or automatic withdrawal form

18. Types of Alternative Creditrent-to-Own Borrower leases tangible items with the condition that the item will be owned by the renter if the term of rent is completed What are alternative options?

19. Types of Alternative CreditTitle and Pawn Loan What are alternative options?

20. Types of Alternative CreditRefund Anticipation Loan

21. How to Obtain Credit Exact process depends on the type of credit and lender What type of loans typically advertise no credit check?

22. Shopping for Credit Shop around with different lenders!

23. Shopping for CreditEvaluate the contract Carefully!

24. Evaluate a Contract • Circle items that are potential red flags • Underline the terms of credit • Annual interest rate • Fees • Consequences of late/missed payments • Other things to consider • Is this a contract you would sign?

25. 7 Steps For Finding the Right Car • Go to Mrs. Fieser’s website • Click on the PPT “7 Steps” • Fill out the missing items on your worksheets • Complete the Research Activity “Buying a Car” • Use 8 % APR and 60 month term for a loan