Credit Unit Test Review, 2024

Which word means “the amount of time you have to pay off a loan?”

• interest

• balance

• term

• principal

Which word means “extra money that you pay to borrow money?”

• interest

• balance

• term

• principal

Which word means “the original amount of money that you borrowed?”

• interest

• balance

• term

• principal

Which word means “the amount of money that you still owe?”

• interest

• balance

• term

• principal

What is one advantage to the lender of requiring a down payment?

• The borrower has a longer time to pay off the loan.

• The borrower is more likely to pay the loan back.

• The borrower will end up paying less interest.

• The borrower will end up paying more interest.

What is one advantage to the borrower of paying a down payment?

• The borrower has a longer time to pay off the loan.

• The borrower is more likely to pay the loan back.

• The borrower will end up paying less interest.

• The borrower will end up paying more interest.

In an amortization schedule:

You will make the same payment each month.

• True

• False

In an amortization schedule:

The amount of your payment that goes to interest increases each month

• True

• False

In an amortization schedule:

You are not allowed to make extra payments.

• True

• False

An amortiation schedule is used for credit card purchases.

• True

• False