Credit - Home Buying

1. A fully amortized payment is split into which two components? 

• 1. The principal and the payment

• 1. The principal and the interest

• 1. The loan term and the interest

• 1. The interest rate and the total interest

1. 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

1. As the months progress on an amortized loan. . .

• 1. The payments stay the same, but the principal is paid down more quickly

• 1. The payments stay the same, but the principal is paid down more slowly

• 1. The payment sizes decrease, but the principal is paid down at the same rate

• 1. The payment sizes decrease, and the principal is paid down more quickly

1. 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.

• 1. You will pay your loan off faster

• 1. You will pay less total interest

• 1. You will pay less total principal

• 1. You will pay less money overall

1. The details of any loan will include the following three components:

• 1. The principal, the interest rate, and the loan term

• 1. The money you pay, the money the lender pays, and the principal

• 1. The mortgage, the auto loan, and the small business loan

• 1. The loan amount, the credit card payment, and the statement

1. Having a good credit score, making a larger down payment, and finding a cosigner with good credit are all ways to . . .

• 1. Decrease your principal

• 1. Increase your total payments

• 1. Increase your term

• 1. Decrease your interest rate

1. Each of these statements describes a variable rate loan EXCEPT...

• 1. Typically starts with a lower interest rate than a fixed rate loan

• 1. Is riskier to the borrower because the interest rate could increase substantially

• 1. Is almost always a better option 

• 1. Can increase or decrease the interest rate over the course of the loan

How can making a larger down payment save you money when purchasing a car?

(Choose two correct answers)

• 1. Your monthly payment will be higher

• 1. Your monthly payment will be lower

• 1. You will pay less interest over the life of the loan

• 1. You will pay more interest over the life of the loan

Which statement most accurately describes the difference between leasing and owning a vehicle?

• 1. Leasing is a term used when you purchase a car for the longest term possible

• 1. Leasing a car is making monthly payments to use a car for a fixed period of time, but then you return it without owning it

• 1. Leasing is a term used when you take the car for an initial test drive

• 1. Leasing a car requires a very large down payment, while purchasing a car does not

Which of the following is NOT a factor to consider when taking out a loan?

• Length of the loan
• Total Cost of the loan
• Impact of the monthly payment on your budget
• How much time it takes to receive the loan