Loan Length and Interest Rates

When you borrow money in the form of a loan or a credit card, you can end up paying more than the loan amount because you will pay ___ in addition to the loan amount.

• rate

• interest

• principal

• balance

Credit cards, which are issued by a bank or business, typically have a ______, which establishes a maximum amount cardholders can purchase using the card.

• minimum payment

• late fee

• interest

• credit limit

When you get your credit card bill, if you cannot pay the full amount, the credit card statement will note a _______ amount, which is the smallest amount the cardholder can pay each month in order to avoid fees and to maintain a good credit rating

• minimum payment

• credit limit

• due date

• balance

The _____ of a loan describes the length of time the borrower will have to repay the loan.

• due date

• term

• interest rate

• credit score

Short-term loans with high interest rates that give borrowers quick access to money are called ______, and they can quickly cause someone to have major financial trouble.

• personal loans

• debit cards

• easy access loans

• student loans

Deborah wants to borrow $10,000 to make some improvements to her home. Which of the following should Deborah most likely use?

• credit card

• easy access loan

• personal loan

• bake sales

Johnny takes out a $35,000 loan to purchase a recreational vehicle. He qualifies for a 4.5% interest rate, and his loan term is six years with a monthly payment of $555.59. How much interest will Johnny pay?

• $40,002.48

• $5,002.48

• $150.01

• $2675.42

Wiley borrowed $7,800.00 to help him start his lawncare business. He qualified for a 6% interest rate, and his loan has a three-year term with a monthly payment of $237.29. What will be the total amount Wiley pays for the loan?

• $8,542.44

• $742.44

• $16,848.00

• $5,298.76

Zelda paid for a $3,000 vacation using a credit card with a 12.5% interest rate. In order to pay the card off in 12 months, Zelda has determined that she will need to make payments of $265.25. What is the amount of interest that Zelda will pay?

• $397.88

• $1,256.75

• $3,183.00

• $183.00

Trinity is trying to select the best loan offer to pay for a new car. The cost of the car is $24,000.00. However, Trinity is going to make a down payment of $5,000. Which option has the lowest amount of interest owed?

• five-year loan at 4.5% with monthly payments of $354.22

• three-year loan at 5% with monthly payments of $569.45

• six-year loan at 4.8% with monthly payments of $304.23

• four-year loan at 6% with monthly payments of $446.22