PF - Unit 7 Test

Front

What is the main difference between an annual interest rate and an annual percentage rate (APR)?

Back

APR is the interest rate combined with guaranteed fees.

Front

Assuming that all criteria like income and credit score are the same, an auto loan is _________________ to get approved than a mortgage.

Back

More likely.

Front

Which financing option would have the lowest total interest for a GMC Sierra at 5.5% APR?

Back

36-month term and $5,000 down payment.

Front

What are the three main components of any loan?

Back

The principal, the interest rate, and the loan term.

Front

Which of the following is an example of a secured debt?

Back

An auto loan.

Front

Define 'Principal' in the context of loans.

Back

The principal is the original sum of money borrowed in a loan.

Front

What does APR stand for?

Back

Annual Percentage Rate.

Front

What is a secured loan?

Back

A secured loan is backed by collateral, which the lender can claim if the borrower defaults.

Front

What is an unsecured loan?

Back

An unsecured loan is not backed by collateral and is based on the borrower's creditworthiness.

Front

What is the purpose of a down payment in a loan?

Back

A down payment reduces the amount borrowed and shows the lender the borrower’s commitment.