Question: 1. Installment Loans vs 2. Secured vs Unsecured 3. Variable vs TYPE OF Revolving Credit Debt Fixed Rate 1 = installment S = secured V

1. Installment Loans vs 2. Secured vs Unsecured 3. Variable vs TYPE OF Revolving Credit Debt Fixed Rate 1 = installment S = secured V = variable CREDIT R = revolving U = unsecured F = fixed CBE = could be either CBE = could be either CBE = could be either Auto loan Installment secured Fixed Credit card Revolving UNSECURED CBE Mortgage Installment secured CBE Payday loan INSTALLMENT unsecured fixed Personal loan (from bank) installment unsecured fixed Small business loan (from bank) CBE secured fixed Student loan (Federal) installment unsecured fixed Assessment Frank is facing a choice. He wants both a newer car and to spend a month in Europe; each costs $6,000. He has decided he will use credit now for one of his options and save his money for three years to pay for the other. Option 1: Use credit now to purchase a newer car and save for a vacation in three years. Option 2: Use credit now to pay for a European vacation and save to purchase a newer car in three years. Explain to Frank how each option will affect his net worth and then make a recommendation for which option he should choose

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