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MCP Borrowing

Total questions: 80

Worksheet time: 1hrs 28mins

Name
Class
Date
1.

Name the savings plan(s) that accumulate interest.

a)

Money Market Accounts

b)

Certificates of Deposit

c)

US Savings Bonds

2.

Select all of the services most commonly provided by banks.

a)

Borrowing Services

b)

Savings Accounts

c)

Payment Services

d)

Brokerage Accounts

3.

Recall what sets Credit Unions apart from commercial banks. (Pick all that apply.)

a)

Credit Unions are owned by their members

b)

Credit Unions offer more free services

c)

Credit Unions are not profit focused

d)

Credit Unions belong to the Federal Reserve

4.

Who may review your credit report without your permission?

a)

Your parents after you are 18 years old

b)

Your current employer

c)

The car sales person to talk to about getting a loan on a new car

d)

Your doctor

5.

Which of the following agencies provide free credit reports for consumers?

a)

Equifax, credit unions

b)

Credit unions, banks

c)

Experian, Credit Reports Association

d)

TransUnion, Experian

e)

None of the above; you must pay a fee for any credit report

6.

The total amount of money you owe other people.

a)

Interest

b)

Debt

c)

Credit

d)

Garnish

7.

Something of value that lenders can repossess if you are unable or unwilling to repay a loan as promised

a)

Credit Score

b)

Grace Period

c)

Collateral

d)

Interest

8.

The cost of borrowing money is referred to as...

a)

interst

b)

credit

c)

credit line

d)

Annual percentage rate

9.

List three strategies you can apply as you turn 18 to build a good credit history.

a)

Take out all of the credit cards you can, make payments late so you pay interest, borrow money to friends

b)

Take out a loan or credit card, Make payments on time, repay yourself with interest

10.

If your payment for your full credit card is received by the lender before the due date, you will not owe any interest.

a)

True

b)

False

11.
When getting a car loan you will want to get the highest or the lowest interest rate?
a)
lowest
b)
highest
12.
Brenda's bank offers car financing for 3, 4, or 5 years.  If Brenda chooses 5-year financing, how many monthly payments will she have?
a)
60
b)
48
c)
36
d)
12
13.
What would happen to a monthly payment if the interest rate increased?
a)
The payment would go up.
b)
The payment would go down.
c)
The payment would remain the same.
d)
None of the above.
14.
An increase in which of the following will decrease the monthly payment?
a)
Interest rate
b)
Down payment
c)
Principal
d)
None of the Above
15.
The maximum amount of charges allowed to an account:
a)
APR
b)
Credit Limit
c)
Annual Fee
d)
Introductory Rate
16.
The amount you must pay on your credit card each month is called a(n):
a)
Available Credit Amount
b)
Minimum Payment
c)
Interest Rate 
d)
Cash Advance
17.
What does it mean when a student loan is "forgiven"?
a)
You get a letter of apology from the government
b)
You don't have to keep going to classes to get your degree
c)
You don't get as much money as your were previosuly promised
d)
You don't have to pay back the remainder of your loan debt
18.
Private student loans have better interest rates than government student loans
a)
True
b)
False
19.
A federal student loan is provided by...
a)
Private companies
b)
The state you live in
c)
US Federal government
d)
Investors
20.

An APR of 25.99% in decimal form is....

a)

.02599

b)

.2599

c)

2.599

d)

25.99

21.

APR stands for

a)

annual profit rate

b)

annual percentage rate

c)

annual participation rate

d)

annuity profit range

22.

What is a Grace Period?

a)

A period where you don't have to pay interest

b)

A period where if you pay, then you don't have to pay interest

c)

A period where the Bank will give you extra time to pay off what you owe

d)

A period where interest is accumulating but you don't have to pay it

23.
In order to qualify for Federal student loans…
a)
You must have financial need
b)
You must file the FAFSA
c)
You must complete a separate application for federal loans
d)
You must take out a private loan
24.

Both an auto loan and a mortgage are examples of a secured debt.

a)

True

b)

False

25.
If my credit score is low at a 600, should my interest be high or low
a)
High Interest
b)
Low Interest
26.

The amount of money that the lender lends to the borrower is called the....

a)

principal

b)

down payment

c)

default

d)

collateral

27.

The longer the loan term the less total interest you pay.

a)

False

b)

True

28.
What would happen to a monthly payment if the interest rate increased?
a)
The payment would go up.
b)
The payment would go down.
c)
The payment would remain the same.
d)
None of the above.
29.

Which of the following loans at 5% APR would have the LOWEST monthly payment?

a)

3 year loan

b)

4 year loan

c)

5 year loan

d)

7 year loan

30.

Which of the following loans at 5% APR would result in the LOWEST total cost of a car loan?

a)

3 year loan

b)

5 year loan

c)

4 year loan

d)

6 year loan

31.

When taking out a loan, the longer the length of the loan is...

a)

the lower your monthly payment will be, but the interest paid will be higher

b)

the higher your monthly payment will be, but the interest paid will be lower

c)

the higher the monthly payment will be AND the higher the interest paid will be

d)

the monthly payment and the interest paid will be the same

32.

One trick a car salesman will try to get you to buy a car is to show you a loan with......because this makes the monthly payment lower.

a)

a longer loan period (example a 7 year loan rather than a 3 year loan)

b)

a shorter loan period (example a 3 year loan rather than a 7 year loan)

c)

2 loans with the exact same time period

d)

a cash payment option

33.

If you INCREASE the amount of your down payment, how will it affect the monthly payment?

a)

The monthly payment will go down

b)

The monthly payment will go up

c)

the monthly payment will stay the same

34.

One way to be sure that you are not being taken advantage of when buying a car is to...

a)

Research the current interest rates for car loans BEFORE you go to the dealership

b)

Increase the length of the car loan until you can afford the monthly payment

c)

Take the loan that the dealership offers you because they are professionals

d)

None of the above

35.

The APR and the length of a loan...

a)

will determine BOTH what the monthly payment and total interest will be

b)

will determine ONLY the monthly payment

c)

will determine ONLY the interest

36.

One reason you might want to make the final payment of your loan before the end of the term is so that you will pay less interest.

a)

True

b)

False

37.

Sarah is buying a new couch for $989. She made a down payment of $200 and financed the remainder. What amount did she finance?

a)

$766

b)

$789

c)

$799

d)

$877

38.

What is the term of a loan?

a)

No more than 5 years

b)

The time period in which you agree to pay back the loan

c)

How long you have on your loan before you start getting charged interest

39.

When applying for a new loan, three things are needed.

a)

Completed application

b)

Co-signer

c)

Proof of income

d)

Valid identification

e)

Credit check

40.

What are the red flags you should be aware of when it comes to predatory lending? Select all that apply.

a)

Failure to present the loan price as negotiable

b)

Unjustified risk-based pricing

c)

Failure to clearly and fully disclose terms and conditions

d)

Short-term loans with disproportionally high fees

41.

Loans for buying cars are called ....

a)

commercial loans

b)

personal loans

c)

auto loans

d)

loan application

42.

The bank adds the interest to the .... to calculate the monthly payment of your loan.

a)

principal

b)

tenure

c)

charge account

d)

credit file

43.

Define financing

a)

Paying back all debts

b)

Using credit to pay for purchases

c)

Using a debit card to make a purchase

d)

Reducing the principal of a loan

44.

Define collateral

a)

Collateral is an asset or group of assets that are linked to a loan

b)

Collateral is a finance charge

c)

Collateral is a down payment

d)

Collateral is a specific type of home loan

45.

What are the 5 basic types of loans?

a)

Automobile

b)

Payday

c)

Mortgage

d)

Federal/Student

e)

Small Business

46.

Fixed Rate is?

a)

if you default on your payments your co-signer is responsible for the payments.

b)

not being able to make a payment or payments.

c)

Stays the same throughout the duration of the loan term. Predictable with higher interest rates.

d)

Can fluctuate depending on the index. Unpredictable with lower interest rates.

47.

When do you need a mortgage?

a)

To buy a car

b)

To pay for college

c)

To buy a house

d)

To pay for your dinner

48.

When do you need a credit card?

a)

To buy a car

b)

To pay for college

c)

To buy a house

d)

To pay for your dinner

49.

When do you need a personal loan?

a)

To buy a car

b)

To pay for college

c)

To replace your kitchen

d)

To pay for your dinner

50.
True or False:  It's possible to get auto title loans, rent-to-own furniture, and other loans without passing a credit check.  
a)
True 
b)
False 
51.
Jake takes out a payday loan of $300. In two weeks, he doesn't have the money to repay it in full. Select which options keeps Jake trapped in the cycle of repayment.
a)
Jake sells his video game system and game collection and pays off the loan.  
b)
Jake borrows $300 from his father to pay back the loan, and sets up a plan to pay him back $50/mo for 6 months.  
c)
Jake uses his paycheck to pay the $300, but then immediately takes out another $300 at the same location to pay bills.
d)
  Jake sells some clothes, furniture, and old sports equipment to pay off the loan 
52.

How do people get trapped in the payday loan cycle?

a)

Customers usually only need to borrow money once

b)

Lenders typically give loans out with a low APR

c)

Customers may visit several payday loan lenders to get $

d)

Lenders typically give out long-term loans

53.

What is a disadvantage of a rent-to-own transaction?

a)

A credit check is not always necessary

b)

There are usually no down payments needed

c)

The consumer ends up paying more than the value of the item

d)

The item may be delivered to your house or apartment

54.

Which of the following statements about predatory loans is TRUE?

a)

Rent-to-own total prices are comparable to those you'd find in a store.

b)

Because payday loans have such high interest rates, they're typically used by high-income households.

c)

Auto title loans are marketed as long-term loans, similar to a mortgage or student loan.

d)

Many short-term lenders realize their borrowers will never be able to pay off their loans on-time, but they still lend anyway.

55.

Which of these best represents a typical interest rate on a "predatory" loan?

a)

0% for the first 12 months

b)

10-25%

c)

50-300%

d)

Over 1000%

56.

Which statement best describes why payday loans, auto title loans, and pawnshop transactions are sometimes referred to as "predatory lending?"

a)

Competition to qualify for these loans is fierce, like a predator.

b)

Lenders "prey" on low-income borrowers who have little to no other options for obtaining a loan.

c)

The salespeople who work at these locations are often mean and unfriendly.

d)

"Predatory lending" is an official category the government uses to describe these particular types of loans, based on their fine print.

57.

Which of the following strategies about auto title lenders increasing their revenues is FALSE?

a)

They charge extremely high interest rates (often over 100%)

b)

They repossess your car after one late payment to resell for more than its value.

c)

They charge "hidden fees" for things like initial inspection and making the contracts difficult to interpret so you may not notice them.

d)

They grant loans for far lower than the actual resale value of your car.

58.

Credit means you ________now and ________ it back later.

a)

Borrow, Pay

b)

Pay, Borrow

c)

Pay, Pay

59.

Credit Card is a type of what?

a)

bond

b)

Loan

c)

savings

60.

Select all that is a form of Good Debt

a)

Mortgage

b)

Credit Card

c)

Student loan

d)

Macy's Credit card

61.

What is the best way to manage credit and debt?

a)

use rewards

b)

spend now worry later

c)

Make big purchases

d)

set goals and budget

62.

Select all the main credit card types

a)

VISA

b)

Mastercard

c)

American Express

d)

Disney

63.
The fee a credit card company charges a credit card holder to use the card for a year.
a)
Annual Fee
b)
Annual Percentage Rate (APR)
c)
Bad Credit
d)
Charge Card
64.
A written record of a person's use of credit, including applying for credit, and using credit or loans to make purchases. Also called a credit report
a)
Credit History
b)
Credit Limit
c)
Good Credit
d)
Grace Period
65.
The charge or fee that is added to a loan or credit card payment when the payment is made after the due date.
a)
Late Payment Fee
b)
Line of Credit
c)
Minimum Payment
d)
Mortgage
66.
A preapproved loan amount that a debtor can borrow against, pay back, and borrow again as needed.
a)
Line of Credit
b)
Minimum Payment
c)
Mortgage
d)
Opportunity Cost
67.
The least amount of money to be repaid on a loan or credit card in order to keep the account in good standing.
a)
Minimum Payment
b)
Mortgage
c)
Opportunity Cost
d)
Penalty APR
68.
A higher interest rate charged on new transactions if you have any late fees or missed payments.
a)
Penalty APR
b)
Principal
c)
Service Credit
d)
Store Account
69.

Paying less than the minimum payment on your credit card bill doesn’t count as a missed payment.

a)

True

b)

False

70.
Student loans impact your credit score.
a)
Myth
b)
Fact
71.

What type of credit score is this 570?

a)

Average

b)

Great

c)

Poor

d)

Excellent

72.

Which is an exceptional credit score?

a)

672

b)

555

c)

713

d)

813

73.

By law, every American can get a credit report for free how often from the three major bureaus?

a)

Every month

b)

Every five years

c)

Yearly

d)

Quarterly

74.

A late payment on a credit card may show up for how long on your credit report?

a)

Up to a year

b)

Up to five years

c)

Up to seven years

d)

Up to ten years

75.

Who are the three credit bureaus that keep track of your credit?

a)

Amazon, Google, Microsoft

b)

Equifax, Experian, Trans Union

c)

Ethereum, Tether, Monero

d)

Erudite, Anthem, Telescore

76.

True or False: You should avoid "hard pulls" or "hard inquiries" too often as they can damage your credit and stay on your account for up to two years.

a)

True

b)

False

77.

Credit scores are calculated in what numeric range?

a)

0-100

b)

0-1000

c)

300-850

d)

200-900

78.

If you have a credit limit of $1000 on your credit card account, your recurring balance should be kept around which amount?

a)

$0

b)

$100

c)

$500

d)

$950

79.
What is a Credit Bureau"?
a)
A business organization that collects information about your financial transactions.
b)
A business organization that offers a variety of credit cards.
c)
A business that collects and distroys old credit cards.
d)
A bank that only makes loans.
80.
What do creditors mean when they determine id you are "creditworthy" or not?
a)
All of theses answers are correct.
b)
Will you pay it back?
c)
What is your salary?
d)
What other financial obligations do you have?

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