Unit 4 Summative Review

Match the following

• A cash advance on payroll checks

• Student Loan

• A loan for buying a vehicle

• Auto Loan

• A loan for Entrepreneurs

• Payday Loan

• A loan for purchasing property

• Mortgage

• A loan to pay for tuition

• Small Business Loan

Which of the following best describes Collateral?

• something valuable that the lender can take as repayment if you default on your loan and can’t pay it back.

• a credit account that provides a lump sum to be paid off over time in equal monthly payments

• occurs when a lender grants a borrower money up to an approved limit.  The borrower may borrow up to their credit limit at their leisure and may reuse their loan again after the balance has been paid down.

• % your financial institution charges you for lending you money

Principal is the amount you​ (a)  

• borrow
• must pay back
• pay in interest as a percentage

One downside of an ​ (a)   mortgage is that it is ​ (b)   than a ​ (c)   mortgage.

• adjustable-rate
• riskier
• fixed-rate
• less risky

Pick two reasons why credit is useful

• Future Planning- Provides opportunities such as getting a mortgage or buying a card

• Saving - you can use credit so you don't have to save as much

• Emergency - Having extra financial means in case of an accident or hospital visit

• Retirement - You can use credit as a way to save for retirement

Which statement is true of both debit AND credit cards?

• Both can trap you in an endless cycle of debt if you’re not careful

• Both allow you to make purchases in a store or online

• Both typically have interest rates between 10-30%

• Both require you to pay a minimum monthly payment when your bill arrives

You’re debating whether to buy a trendy fall jacket that costs a whopping $200! You have it sitting in your online cart, and you see there’s a “Buy Now, Pay Later” option available for the jacket. Which best describes an example of how that would work?

• You pay the full $200 now, but they wait a month to send it to you, giving you the chance to cancel, penalty free, if you change your mind

• You pay $100 right now, you receive the jacket, and you owe $100 more a year later on the anniversary of your purchase date

• They ship you the jacket now, and you owe four $50 payments, once every 2 weeks, until the jacket is paid in full

• You reserve the jacket now, you pay as much or as little as you want in each payment, and when you eventually get to $200, they send you the jacket

Casey has an amortized loan payment of $400, and the interest they owe for that month is $50. By how much does Casey pay down the principal?

• $50

• $350

• $400

• $450

If you can afford it, why is it a great idea to pay MORE than your amortized payment on a car, home, or other loan? Select all that apply.

• You will pay your loan off faster

• You will pay less total interest

• You will pay less total principal

• You will pay less money overall

What is the FIRST step in purchasing a new vehicle?

• Selecting the best interest rate based on your credit score

• Check to see how much money you can afford to spend on the monthly payments and down payment

• Getting pre-approved by your bank so you know you have the money to buy a vehicle

• Checking your credit score so you can find the best interest rate