NGPF-Loan Fundamentals Exam

What is the purpose of the Federal Reserve Bank of New York's household debt and credit report?

• To track the spending habits of individuals in the US.

• To depict total household debt in the US through quarterly graphs.

• To provide a list of delinquent accounts in the US.

• To compare the debt of different countries.

What is a characteristic of an amortized loan?

• The monthly payment changes every month.

• The monthly payment remains the same until the debt is paid off.

• The interest rate increases over time.

• The loan is paid off in a single payment.

Which of the following is an example of an amortized loan?

• Credit card debt.

• Home mortgage.

• Payday loan.

• Buy Now, Pay Later plan.

What is the difference between an installment loan and a credit card payment?

• Installment loans have variable monthly payments, while credit card payments are fixed.

• Installment loans have fixed monthly payments, while credit card payments can change.

• Credit card payments are always higher than installment loan payments.

• Credit card payments are paid off in one installment, while installment loans are not.

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

Casey has an amortized loan payment of $400, and the interest they owe for that month is $50. By how much does Casey pay down the principal?

• $50

• $350

• $400

• $450

As the months progress on an amortized loan...

• The payments stay the same, but the principal is paid down more quickly

• The payments stay the same, but the principal is paid down more slowly

• The payment sizes decrease, but the principal is paid down at the same rate

• The payment sizes decrease, and the principal is paid down more quickly

If you can afford it, why is it a great idea to pay MORE than your amortized payment on a car, home, or other loan? Select all that apply.

• You will pay your loan off faster

• You will pay less total interest

• You will pay less total principal

• You will pay less money overall

What is 'Buy Now, Pay Later' commonly referred to as?

• A type of installment loan

• A type of credit card

• A type of mortgage

• A type of savings account

If Buy Now, Pay Later loans are just breaking your payment into 4 equal parts, how could this deal possibly become problematic to the borrower?

• It helps the borrower save money on interest.

• It encourages the borrower to spend more than they can afford.

• It reduces the total cost of the purchase.

• It eliminates the need for budgeting.