Loans 101 (Loan Basics 1/3)

Another way to describe a loan is:

• Interest money

• Debited money

• Borrowed money

How do banks earn money off of loans?

• Interest payments

• Good faith payments

T/F: A bank CANNOT seize an asset (item purchased with the loan) from a person if they do not make their payments.

• True

• False

Which type of interest rate can change over time (as opposed to being the same amount each time?)

• Fixed

• Variable

When comparing loans, which can be more important to consider?

• APR

• Interest rate

The amount of an APR is going to be highly dependent upon your:

• Interest rate

• Debit rate

• Credit score

A shorter loan term will lead to a ________ monthly loan payment.

• Higher

• Lower

Having a shorter term loan will lead to ______ interest paid overall.

• More

• Less