Loan Basics Video

What is the principal in a loan?

• The interest rate charged by the lender

• The amount of money borrowed

• The time period for loan repayment

• The collateral used for the loan

Which type of loan is specifically used for purchasing a vehicle?

• Student loan

• Mortgage

• Auto loan

• Payday loan

What is collateral in the context of secured loans?

• The interest rate charged by the lender

• The amount of money borrowed

• Something valuable that can be taken if the loan is not repaid

• The time period for loan repayment

Why might someone choose a secured loan over an unsecured loan?

• Secured loans have higher interest rates

• Secured loans are less risky for the borrower

• Secured loans usually have lower interest rates

• Secured loans do not require collateral

What factor can help you qualify for a lower interest rate on a loan?

• A low credit score

• A high amount of existing debt

• A good employment history

• A short-term loan

What is a cosigner in the context of loans?

• A person who lends you money

• A person who is responsible for repaying the loan if you default

• A person who sets the interest rate

• A person who provides collateral

What is the difference between a fixed rate and a variable rate loan?

• Fixed rates change with the market, variable rates do not

• Fixed rates stay the same, variable rates change with an index

• Fixed rates are always higher than variable rates

• Variable rates are always lower than fixed rates

Which type of loan is typically used for educational expenses?

• Mortgage

• Auto loan

• Student loan

• Payday loan

What is one potential disadvantage of a payday loan?

• They have low interest rates

• They are long-term loans

• They are often considered the worst due to high interest rates

• They require collateral

How can a long-standing relationship with a financial institution affect your loan?

• It can increase your interest rate

• It can decrease your interest rate

• It has no effect on your loan

• It requires you to have a cosigner