Review for Unit 7 Test

Each of the following is an installment loan, except for _____ which is a revolving line of credit.

• Auto Loan

• Credit Card

• Mortgage

• Student Loan

Keon plans to buy a new GMC Sierra for $47,000 at 5.5% APR. Which financing option would have the lowest total interest?

• 60 month term and $2000 down payment

• 60 month term and $3500 down payment

• 36 month term and $3500 down payment

• 36 month term and $5000 down payment

In order to take out federal student loans, you need to...

• have a credit score above 600

• complete and submit FAFSA

• choose a repayment method before enrolling

• take out at least $6000 in student loans

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

• APR is the interest rate combined with guaranteed fees

• APR is almost always lower than interest rate

• Interest rate is for loans, APR is for credit cards

• Interest rate is money you earn on investments, while APR is money you pay for debt

For most American households, the largest source of debt is...

• Student loans

• Credit Cards

• Medical debt

• Mortgages

If you fall behind on your loan payments, all of the following are recommended steps EXCEPT....

• Calling the lender to negotiate a payment plan

• Reducing your spending to divert additional income to the loan payment

• Putting past due loan payments on a credit card

• Find additional sources of income to help make payments

All of the following affect the monthly payment amount of a mortgage EXCEPT...

• down payment

• interest rate

• term of the loan

• the bank that issued the mortgage

What is one way to guarantee you don't pay interest on your credit card?

• pay the entire balance in full every month

• pay your minimum monthly payment on time

• spend less than your credit limit

• only make new purchases every other month

After shopping around, Kelli found a car she'd love to buy. When it comes time to talk about financing, the sales person at the dealer says, "I can offer you 6% on $24,000 for five years." What do each of those numbers mean?

• 6% is the term

  $24000 is the down payment

  5 years is the interest rate

• 6% is the term

  $24000 is the interest rate

  5 years is the principal

• 6% is the interest rate

  $24000 is the term

  5 years is the principal

• 6% is the interest rate

  $24000 is the principal

  5 years is the term

Moto has a $7000 credit card balance, and he cannot afford to pay it off all at once. The larger his monthly payments...

• The longer it will take to pay off and the smaller total interest he will pay

• the longer it will take to pay of and the larger total interest he will pay

• the shorter it will take to pay off and the smaller total interest he will pay

• the shorter it will take to pay off and the larger total interest he will pay