Understanding Borrowing Options

What is a key feature of an overdraft?

• It is a long-term loan.

• It allows you to spend more than your account balance.

• It is used for purchasing a house.

• It has no interest charges.

Which borrowing option is not suitable for large purchases like a house or car?

• Mortgage

• Hire Purchase

• Personal Loan

• Overdraft

Which of the following is typically required to apply for a personal loan?

• A co-signer

• A detailed credit history

• Proof of employment only

• A mortgage

What is a common feature of personal loans?

• They are only for short-term needs.

• They have set repayment terms.

• They require no financial background check.

• They have variable interest rates.

In a hire purchase agreement, when does the customer own the item?

• Once the agreement is signed

• After the first payment

• Immediately upon receiving the item

• After the final payment

What is a potential downside of hire purchase agreements?

• They have no interest charges.

• They are only available for electronics.

• They can be misleadingly marketed.

• They require immediate full payment.

What is a mortgage primarily used for?

• Purchasing property

• Funding a vacation

• Buying a car

• Paying off credit card debt

What happens if you fail to make consistent mortgage payments?

• You will be charged a small fee.

• You will lose your credit card privileges.

• The bank will increase your interest rate.

• The bank may repossess your home.

What determines the credit limit on a credit card?

• The number of credit cards you own

• Your age

• The type of purchases you make

• Your income and credit history

What is a significant risk associated with payday loans?

• They have low interest rates.

• They are long-term loans.

• They can lead to uncontrollable debt.

• They require no credit check.