If a consumer makes monthly payments of $250 to pay off a car loan, what type of credit is she using?
A.
non-revolving
B.
revolving
C.
short term
D.
unsecured
1. A
2. D
3. C
4. B
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are you sure?
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Thanks Guy!
yup answers are right!
To determine the type of credit being used, we need to understand the characteristics of each option and then analyze the given information.
A. Non-revolving credit: This refers to a loan with a fixed repayment term and a fixed monthly payment. Once the loan is fully repaid, the credit line is closed.
B. Revolving credit: This involves a line of credit that can be used repeatedly, and the consumer has the flexibility to make minimum monthly payments or pay the full balance. Examples include credit cards or home equity lines of credit.
C. Short-term credit: This typically refers to a loan with a shorter repayment term, often less than a year. It is unlikely to be applicable in this case since the consumer is making monthly payments.
D. Unsecured credit: This type of credit does not require collateral (such as a house or car) to secure the loan. Credit cards and personal loans are common examples.
Given that the consumer is making monthly payments to pay off a car loan, it is likely that she is using a non-revolving credit. Car loans typically have a fixed repayment term and fixed monthly payments until the loan is fully repaid.
Therefore, the correct answer is A. non-revolving.