NGPF: Types of Credit: Lessons 1 - 7 Test

Front

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?

Back

All 3 cards are completely different

Front

The average APR for a payday loan is closest to ...

Back

400%

Front

Which of the following is most likely to represent a fixed rate, secured debt? A student loan, A credit card, A prepaid debit card, An auto loan

Back

An auto loan

Front

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan? Options: Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount, The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly, The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan, Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash

Back

The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly

Front

If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice? Options: Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help, Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control, Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms, Explore whether a free or non-profit credit counseling service could help

Back

Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

Front

When loans are amortized, monthly payments are , while the amount of your monthly payment applied to interest and the amount of your monthly payment applied to the principal over time.

Back

Constant, Decreases, Increases

Front

Which of the following is true about fixed and adjustable-rate mortgages? Options: Fixed-rate mortgages have a constant payment every month, but an interest rate that increases throughout the term of the loan, Fixed-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions, Adjustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions, The two mortgages work the same way but are called different names depending if they come from a bank or a credit union

Back

Adjustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions

Front

If her top priority is having the lowest monthly payments possible, which advice should she follow? Options: Put in $0 for your down payment, and choose a loan with a short term length; Put in $2500 for your down payment, and choose a loan with a short term length; Put in $3500 for your down payment, and choose a loan with a long term length; Put in $5000 for your down payment, and choose a loan with a long term length

Back

Put in $5000 for your down payment, and choose a loan with a long term length

Front

Reading through a credit card’s Schumer Box, you see the APR for a specific card is set at 9.99% - 23.99%. Which statement is true?

Back

Your APR will be within that range, depending on the strength of your credit history

Front

What is an advantage of using a credit card?

Back

You can make an emergency purchase that you otherwise don’t have the money to pay for right now