Question

Complete the sentences using the drop-down menus to compare the different types of credits available to borrowers. Examples of secured loans are and loans. Personal loans can be borrowed from a bank or a financial institution, and loans are borrowed from individuals. Title and payday loans have interest rates while peer-to-peer loans typically have interest rates.

Answer 1

When comparing different types of credits available to borrowers, it is important to consider secured loans and unsecured loans. Personal loans are a type of unsecured loan borrowed from banks or financial institutions, while title and payday loans are examples of secured loans. Peer-to-peer loans typically have lower interest rates compared to traditional personal loans.

Step-by-step explanation:

When comparing different types of credits available to borrowers, it is important to consider the examples of secured loans and unsecured loans. Secured loans are backed by collateral, such as a house or car, which the lender can seize if the borrower fails to repay the loan. On the other hand, unsecured loans do not require collateral and are typically based on the borrower's creditworthiness.

Personal loans, which are borrowed from a bank or financial institution, fall under the category of unsecured loans. They are not backed by collateral and are based on the borrower's credit history and income. Additionally, personal loans often have higher interest rates compared to secured loans because they are considered more risky for the lender.

Title loans and payday loans are examples of secured loans. Title loans require borrowers to use their car title as collateral, while payday loans are short-term loans with high interest rates. Peer-to-peer loans, also known as P2P loans, are unsecured loans borrowed from individuals through online platforms. These loans often have lower interest rates compared to traditional personal loans.

Answer 2

A personal loan suits someone with a fair credit score needing moderate funds for medical bills repayable over years. It aligns with fair credit criteria, offers suitable amounts, and extends longer repayment periods compared to other options.

Based on the comparison table, a personal loan emerges as the most suitable choice for someone with a fair credit score needing moderate funds for medical bills repayable over several years. Personal loans accommodate fair credit scores and offer amounts suitable for medical expenses.

While they have shorter terms compared to secured loans, they typically extend longer repayment periods than title, payday, or peer-to-peer loans. This aligns with the borrower's need for an extended repayment duration.

The variability in interest rates might mean obtaining competitive rates despite the fair credit score. Overall, a personal loan provides a balance between accommodating the borrower's credit status, offering a moderate loan amount, and allowing a longer repayment period.

Here's the completed question:

A table compares the different types of credits available to borrowers. Fill in the blanks using the drop-down menus to compare the features of secured loans, personal loans, title loans, payday loans, and peer-to-peer loans.

| Feature | Secured Loans | Personal Loans | Title Loans | Payday Loans | Peer-to-Peer Loans |

| Collateral Requirement | Required | Not required | Required (vehicle title) | Required (paycheck) | Not required |

| Interest Rates | Lower | Variable | High | Very high | Variable |

| Credit Score Requirement | Good or excellent | Fair or good | Poor or fair | Poor or fair | Varies |

| Loan Amount | Higher | Lower | Lower | Lower | Varies |

| Loan Terms | Longer | Shorter | Shorter | Shorter | Shorter |

| Examples| Mortgage loans, car loans | Personal loans, line of credit | Title loans | Payday loans | Peer-to-peer loans |

Based on the information in the table, which type of loan would be most suitable for someone with a fair credit score, who needs to borrow a moderate amount of money to pay off medical bills, and is able to repay the loan over a period of several years?