Sutton - Unit 4 review

The details of any loan will include the following 3 components:

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

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

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

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

Why are secured loans considered less risky to the lender?

• Lenders are allowed to conduct background checks for secured loans

• Lenders can take valuable collateral if you fail to repay your loan

• Lenders give secured loans all the time, so they're more comfortable doing them

• Lenders can check your credit score before giving a secured loan, which they can't do for an unsecured loan

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

• Decrease your principal

• Decrease your interest rate

• Increase your term

• Increase your total payments

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

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

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

• Is almost always a better option

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

Which word represents the total cost of the item you’re purchasing on credit minus any down payment you make upfront?

• Interest

• Principal

• final cost

• APR

A person's Net worth is:

• Amount they are worth based on their paychecks

• A person's money and assets minus the debts that they have.

• The total of a person's debt

• The total of a person's assets.

What is APR?

• Adjusted percentage rate

• Annually pro rated

• Annual percentage rate

• Adjusted and pro rated

What is a Schumer Box?

• A statement on loans that gives you the terms of your payback

• A box containing the money you receive from your loan

• A "box" on credit card statements listing all terms associated with the credit card

• A statement comparing one credit card to another

All of the following are good reasons to use a credit card rather than a debit card EXCEPT:

• A credit card protects the owner from fraud

• Using credit means you don't have to spend your own money

• Credit cards can have bonuses or points you can earn for usage

• Using credit responsibly can help build your credit rating

A fully amortized payment is split into which two components?

• The principal and the payment

• The principal and the interest

• The loan term and the interest

• The interest rate and the total interest