Personal Finance: Chapter Six Online Pre-Test

Which of the following lenders will likely provide the lowest interest rate to qualified borrowers?

• Banks and credit unions

• Credit card company

• Title loan lender

• Retail/store credit card

Susan borrowed money from her credit union using her car as collateral. The monthly interest rate on the loan is 0.2%. There were no other fees associated with the loan. What is the APR of Susan's car loan? Assume 12 equal months

• 0.2% APR

• 2.4% APR

• 2.0% APR

• 24.0% APR

Answer explanation

Use the given percent and multiply it by 12 months for the answer

Izzy just received a credit card offer in the mail. The credit card has an APR of 18%. What is the monthly interest rate that will apply to any unpaid balance on this credit card? Assume 12 equal months.

• 18.0%

• 1.0%

• 1.5%

• 1.8%

Answer explanation

Take the APR as a decimal and divide that by 12 for the monthly interest rate.

Why is it important to establish positive credit history?

• Higher credit scores result in lower interest rates on loans

• You are more likely to be offered a loan by a bank

• Positive credit history results in higher credit scores

• All of the above

What is important in establishing good credit?

• Making payments on time

• Being late on payments

• Spending 100% of your credit limit

• Missing a payment

Late payments can help create a high credit score

• True

• False

Who would be more likely to get a car loan?

• Dave with a credit score 560

• Julie with a credit score 780

What does "spend within your limit" means?

• Buying unnecessary items

• Spend a lot

• Spending only on necessities

Which is the better buy of salsa?

• $1.80 for 16 ounces

• $2.20 for 24 ounces

One of the advantages of renting is that you

• can build equity.

• can remodel or make decorative changes as wanted.

• have less responsibility for maintenance and upkeep.

• have an opportunity to make friends with your neighbors.