Credit Unit Test - M

Which of the following is most likely to represent a fixed rate, secured debt?

• A student loan

• A credit card

• An auto loan

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

If her top priority is having the lowest monthly payments possible, which advice should she follow?

• Put in $0 for your down payment, and choose a loan with a short term length

• Put in $2500 for your down payment, and choose a loan with a short term length

• Put in $5000 for your down payment, and choose a loan with a long term length

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?

• All 3 cards are completely different

• Debit cards and prepaid debit cards are the same

• Debit cards and credit cards are the same

A loan with a shorter term length will have (a)   monthly payments, and you will pay (b)   in total interest.

• lower

• higher

• less

• more

Select the statement below that accurately describes a characteristic of a credit card.

• You owe the same payment every month

• Making full payments on-time every month is the only way to avoid interest charges

• They do not charge interest

An excellent credit score will help with which aspect of car financing?

• Bargaining for a great sales price

• Receiving a large down payment

• Qualifying for a low interest rate

• $200

• $800

• $1000

What are the two most important factors in calculating your credit score?

• Payment history and types of accounts

• Payment history and total debt

• Length of credit history and new credit inquiries

Heather realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies, EXCEPT...

• Reducing spending by canceling some of her streaming subscriptions

• Taking extra shifts at work to increase her income

• Applying for another credit card to use in case she runs out of cash paying off her debt