Credit Test (FinLit2024)

Money that is borrowed and expected to be paid back with interest

• Loan

• Credit

• Bankruptcy

• Lender

A measure of a person's credit risk. Banks use it to decide whether they should give out loans. Typically between 300-850

• Interest

• Credit Score

• Credit Card

• Amortization Schedule

The original amount in a bank account OR borrowed for a loan

• Interest

• Principal

• Term

• Credit Score

Money paid regularly for the use of money borrowed

• Amortization Schedule

• Principal

• Term

• Interest

A table with each monthly payment on a loan. It shows how much of the monthly payment goes toward interest and principal.

• Amortization Schedule

• Schumer Box

• Authorization Table

• Check Register

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?

• Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount

• The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly

• The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan

• Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash

When loans are amortized, monthly payments are _______ , while the interest portion of the monthly payment ________  and the principal portion of the monthly payment _______  over time.

• Constant, Increases, Increases

• Variable, Decreases, Increases

• Constant, Decreases, Increases

• Variable, Decreases, Decreases

Which of the following statements is CORRECT about secured loans?

• They are an example of a credit card

• They require collateral, in the form of assets like a car or a home, to be exchanged for the loan

• In the event of default, the borrower loses nothing except for the down payment

• They usually have higher interest rates as compared with unsecured loans

A fully amortized payment is split into which two components?

• principal and the payment

• principal and the interest

• loan term and the interest

A record of the borrower’s past loan and credit‐related

transactions.

• Lender

• Credit History

• Credit Report

• Closed‐end Credit