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READING PRACTICE: Loans, Interest and Credit

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Answer the questions below on a separate piece of paper. Check answers only after you have answered them. When you finish, give your answer page to your instructor.

1. What is a loan?

ANSWER Find answer in reading.

2. What are the advantages and disadvantages of getting a loan?

ANSWER Answers will vary. Advantages: to buy necessary things. Disadvantages: too much debt

3. What is debt?
 

ANSWER Find answer in reading.

4. Explain interest in your own words.

ANSWER Answers will vary. Basically, the money a lender makes on a loan.

5. In your opinion, how much money should a moneylender make on a loan?
 
 

ANSWER Answers will vary.

6. Explain 2 meanings of the word credit.
 

  ANSWER Find answer in reading.

7. Why is good credit important?
 
 

ANSWER Answers will vary. Basically, good credit makes buying and borrowing easier and cheaper.

8. What could lead to a bad credit record?
 

ANSWER Answers will vary. Late payments or no payments are some possibilities.

9. In your opinion, how can someone manage his money?
 

ANSWER Answers may vary. By controlling how much he has, how much he spends, how much he owes.

10. How can a lender control someone's money?
 

ANSWER Answers may vary.

Note: Questions 2, 5, 7, 8, 9, and 10 may be used for discussion purposes.