Quiz-7.1 &7.2

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 interest, 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

What is an APR?

• Annual interest rate

• Annual percentage rate

• Annual percentage report

• Annual percentage yield

Which type of debt is considered revolving credit?

• A credit card

• A mortgage

• An auto loan

• A small business loan

Mishka is considering a 9.99%, $10,000 loan to be repaid after 6 years. What does that mean?

• Term is 9.99%, principal is $10,000, interest rate is 6 years

• Term is 6 years, principal is $10,000, interest rate is 9.99%

• Term is $10,000, principal is 9.99%, interest rate is 6 years

• Term is $10,000, principal is 6 years, interest rate is 9.99%

Using the equation for simple interest, how much should JJ expect to pay the bank, in total, for his 3 year, $10,000 loan at 5% interest?

• $1,500

• $11,500

• $31,500

• $150,000

Using the equation for simple interest, how much should JJ expect to pay the bank, in total, for his 3 year, $20,000 loan at 5% interest?

• $23,000

• $3000

• $31,500

• $120000

Other than credit card usage, what are some other reasons people say they are in debt?

• Medical expenses

• Student loans

• Gambling

• All of the above