Drag each label to the correct location on the image.

Compare revolving credit and closed-end credit.
car lease
credit cards
mortgage loan
home-equity line of credit

1 answer

To compare revolving credit and closed-end credit, here's how you would generally categorize the terms you provided:

Revolving Credit:

  • Credit Cards: These are a common form of revolving credit where you have a credit limit and can borrow against it, repay, and borrow again.
  • Home-Equity Line of Credit: Similar to credit cards, this allows you to borrow against the equity in your home up to a limit, with the ability to borrow, repay, and borrow again.

Closed-End Credit:

  • Mortgage Loan: This is a type of closed-end credit where you borrow a specific amount for a specific purpose (buying a home) and repay it over time through scheduled payments.
  • Car Lease: While leasing a car typically involves paying for the use of the vehicle over time, it is often categorized as a form of closed-end credit because it usually involves a fixed term and specific payment amounts until the end of the lease.

So, you would place the labels accordingly:

  • Revolving Credit:

    • Credit Cards
    • Home-Equity Line of Credit
  • Closed-End Credit:

    • Mortgage Loan
    • Car Lease