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Financial Literacy Pt 2 Credits and Loans

Total questions: 10

Worksheet time: 5mins

Name
Class
Date
1.

If you have a loan which requires monthly payments, which equation is the correct way your interest will be calculated for each payment? (Remember, APR stands for Annual Percentage Rate)

a)

APR/12=monthly interest rate

b)

APR is the monthly interest rate

c)

APR x 12 = monthly interest rate

d)

APR x 4 = monthly interest rate

2.

If you have a fixed rate loan for three years with monthly installments, which of the following equations will best allow you to calculate the full repayment cost of your loan?

a)

Monthly payment x 36 = full repayment cost

b)

Monthly payment x 3 = full repayment cost

c)

Monthly x 36 - interest = full repayment cost

d)

Monthly payment x 3 - interest = full repayment cost

3.

If you have fixed and variable expenses which total $185 each month, you want to put $10 into savings, and you want $15 to go out with friends, how much money have to earn as "take-home pay"?

a)

$210

b)

$200

c)

$220

d)

$225

4.

Janet explained to her lender she has researched pricing for what she will have to buy to get her home office setup and initial marketing of her business. Janet described which of the following?

a)

How much she wants to borrow

b)

The purpose of the loan

c)

Justification for the amount to be borrowed

d)

How she plans on paying the money back

5.

Janet provided documentation to her lender of each piece of equipment along with proof of the best quote for purchasing each, an estimate from a printer for her marketing pieces, and proof of the potential clients for whom she hopes she will be working. Janet described which of the following?

a)

Justification for the amount to be borrowed

b)

How she plans on paying the money back

c)

The purpose of the loan

d)

How much she wants to borrow

6.

Janet told the lender she worked with a local non-profit organization which helps small businesses to estimate when she could reasonably expect to begin earning income and how much she could expect to earn if all considerations worked in her favor. Janet described which of the following?

a)

How much she can afford to pay each month

b)

How she plans on paying the money back

c)

Justification for the amount to be borrowed

d)

How much she wants to borrow

7.

Jim traveled from his hotel in Boston to his favorite restaurant, then to the subway and on the airport to fly home to New York. It wasn't until he was home that he realized he no longer had the credit card he used in Boston. Of the following, choose which best describes this scenario.

a)

Lost Credit Card

b)

Too many credit cards

c)

Disputed charge with merchant

d)

Stolen credit card

8.

Which of the following best describes the main difference between a loan payment and a credit card payment?

a)

The loan payment targets a specific date to pay off the amount borrowed

b)

The credit card payment targets a specific date to pay off

c)

The loan payment does not include interest

d)

The credit card payment does not include interest

9.

______________ is known as the length of time you have to pay the loan back in full to the lender. Which of the following components best matches this definition?

a)

Principal

b)

Term

c)

Fixed Rate

d)

Cost (interest)

10.

Of the types of loans listed below, which is guaranteed with collateral?

a)

Secure

b)

Unsecured

c)

Lump Sum

d)

Installment