FM: Credit

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property or cash) as collateral for the loan.

• True
• False

Interest is a contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future.

• True
• False

Predatory lending is legal and allowed in all 50 states.

• True
• False

Interest is the rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.

• True
• False

Of the 3 C's:  CHARACTER involves how much money you have in savings.

• True
• False

Of the 3 C's:  COLLATERAL involves whether you have assets that a lender is willing to consider when deciding whether to authorize a loan.

• True
• False

Excluding a mortgage payment, 10% is the maximum percentage of take-home pay that should go towards loan payments each month.

• True
• False

Joint loans involve a promise to pay another person's debt arising out of contract if that person fails to do so.

• True
• False