Name:

Period:
Credit Introduction
This assignment follows the Credit Introduction video-make a copy of the assignment-you will submit it to
Canvas upon completion.

Task 1-TERMS
Define the following terms-the ones in blue are done for you!
➢ Principal-

➢ Interest-

➢ Term-length of the loan

➢ Secured loan-

➢ Unsecured loan-

➢ Collateral-stuff/money that can be seized if you don’t pay the loan (House, Vehicle)

➢ Cosigner -

➢ Variable rate loan-

➢ Fixed rate loan-

➢ Installment Credit-Borrowing a set amount of money and then making monthly installments
(payments) until it is paid in full

➢ Revolving Credit-

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TASK 2-HOW MUCH DOES IT REALLY COST
Ues the The Credit Cost Calculator to complete the following 3 scenarios
Credit Cost Calculator

Scenario 1
Brian wants to buy a stereo for $650 and pay for it using a credit card that has an Annual Percentage Rate of
19.85%.
If Brian pays the minimum monthly payment of $21.45:
1. How long will it take him to pay for the stereo?

2. What is the total amount Brian will pay for the stereo?

3. What is Brian’s total cost of using credit?

If Brian makes monthly payments of $60:

4. How many months will it take for Brian to pay off the stereo?

5. What is the total amount Brian will pay for the stereo?

6. What is Brian’s total cost of using credit?

Scenario 2
Patty took a cash advance of $1,500. Her new credit card charges an Annual Percentage Rate of 21%. The
transaction fee for cash advances is 3% of the cash advance, with a maximum fee of $35. This fee is added to
the total cash advance, and accrues interest.

If Patty makes monthly payments of $65:

1. How long will it take Patty to pay for the cash advance?

2. What is the total amount Patty will end up paying for the cash advance?

3. How much interest and fees will Patty pay?

If Patty pays the cash advance back at a rate of $130 per month:

4. How long will it take Patty to pay for the cash advance?

5. What is the total amount Patty will end up paying for the cash advance?

6. How much interest and fees will Patty pay?

Scenario 3
Marie just used her new credit card to buy a bike for $400. Her budget allows her to pay no more than $25 each

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month on her credit card. Marie has decided not to use the credit card again until the bike is paid off. The credit
card she used has an Annual Percentage Rate of 21%.

If Marie pays $25 each month on her credit card:

1. How long will it take Marie to pay for the bike?

2. What is the total amount Marie will end up paying for the bike?

3. How much interest will Marie pay for using her credit card to buy the bike?

If Marie pays the minimum payment of $14 each month:

4. How long will it take Marie to pay for the bike?

5. What is the total amount Marie will end up paying for the bike?

6. How much interest will Marie pay for using her credit card to buy the bike?

TASK 3-Shady Sam the Loan Shark

Directions: After you play the game you will record your findings below-make sure to take a screenshot of
your results at the very end-you need to embed the screenshot into the end of this assignment!

The Goals of the Game

❖ Play the role of a loan shark
❖ Understand what tactics lenders use to maximize their profits
❖ Determine which loan terms increase profits for lenders
❖ Learn about different types of loans and fees lenders offer and charge
❖ Make as much money as possible

Play the Game

1. Go to shadysam.com. Enter your first name and click START PLAYING.
2. At the end of the game, STOP on the screen that includes your last email and Total Profits. Use it to
answer the following questions
*Total profits-
*Nickname-
*Shark rating-

Reflection Questions-please answer in complete sentences.

3. What was the goal given to you at the beginning of the game?

4. As the game says, most borrowers only pay attention to the monthly payment when taking out a
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 loan.
a. Why do you think this is?

b. How can this benefit the lender?

5. You probably noticed a pattern that allowed you to maximize profits. Complete this sentence by
circling or highlighting one term:

The loans that were most profitable tended to have the shortest / longest terms and the
lowest / highest monthly payments.

6. Which loan created a habit where the borrower kept coming back to request an extension? What
are some possible explanations for why these loans are popular despite the fact that they create a
cycle of debt for many borrowers?

7. One of the most profitable loans that you made was the adjustable-rate mortgage. What risk is the
borrower taking with this loan?

8. Describe your emotional state as you played the game and why you felt that way.

9. How do you feel about the total profits you made with Shady Sam? How do those emotions
compare with how you felt while you were playing the game? Explain.

10. What are three takeaways you learned from playing Shady Sam that will help you as a borrower in
the future? Be specific.

11. Screenshot of your final results! -delete mine below and add yours!

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