4
QuizMultiple Choice

Credit and Loans — Quiz

Question 4 • Personal Finance

Which describes an example of using unsecured credit?

Answer
A
Someone buys a new boat with a loan from a boat dealer.
B
Someone buys new gutters for a home with a credit card.
C
Someone buys a new home with a mortgage from a bank.
D
Someone buys a new vehicle with a loan from a car dealer.

Explanation

Unsecured credit is borrowing that is not backed by specific property the lender can repossess if the borrower does not pay. A credit card balance is generally unsecured, so using a credit card to buy new gutters is the example. Mortgages and vehicle or boat loans are typically secured by the home, vehicle, or boat.

AI-written and checked against the verified answer.

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