U3 - Types of Loans

What is the principal in a loan?

• The total interest paid

• The amount of money borrowed

• The fees charged by the lender

• The monthly payment amount

What does APR stand for?

• Annual Payment Rate

• Annual Percentage Rate

• Annual Principal Rate

• Annual Payback Rate

What is interest in the context of loans?

• The amount borrowed

• The price borrowers pay to use the lender’s money

• The total loan amount

• The monthly payment

What type of loan allows borrowers to continue adding purchases up to a set credit limit?

• Closed-End Loans

• Secured Loans

• Open-End Loans

• Unsecured Loans

What is a common example of a closed-end loan?

• Credit card

• Line of credit

• Car loan

• Personal loan

What should consumers do to get the best possible deal on a loan?

• Choose the first loan option

• Compare different types of loans, rates, and terms

• Ignore the APR

• Only consider secured loans

What generally earns better loan terms, interest rates, and fees?

• Low credit scores

• High credit scores

• No credit history

• Only secured loans

What is a personal loan commonly used for?

• Buying groceries

• Paying for vacations

• Purchasing stocks

• Buying a new phone

What is the collateral in a mortgage loan?

• The borrower's car

• The borrower's savings account

• The house or real estate

• The borrower's jewelry

What is an adjustable rate mortgage?

• A mortgage with a fixed interest rate

• A mortgage with an interest rate that varies during the life of the loan

• A mortgage with no interest rate

• A mortgage with a decreasing interest rate