WorksheetsFinancial Literacy
Total questions: 101
Worksheet time: 1hrs 4mins
The longer the money is invested the better?
True
False
Money earned or received is called?
Expenses
Income
Deductions
Check
The total amount of personal income before taxes and deductions is called?
Net Income
Gross Income
The percentage at which interest is charged or paid.
interest
interest rate
budget
cost benefit analysis
What are the 5 basic types of loans?
Automobile
Payday
Mortgage
Federal/Student
Small Business
What does principle stand for?
% the lender charges you for borrowing the money.
the amount of money being borrowed.
time given to pay back the loan.
Assets you put up against the loan as a safeguard for the lender against defaulted payments.
Interest Rate?
% the lender charges you for borrowing the money.
the amount of money being borrowed.
time given to pay back the loan.
Assets you put up against the loan as a safeguard for the lender against defaulted payments.
Loan Term?
% the lender charges you for borrowing the money.
the amount of money being borrowed.
time given to pay back the loan.
Assets you put up against the loan as a safeguard for the lender against defaulted payments.
What is Collateral?
% the lender charges you for borrowing the money.
the amount of money being borrowed.
time given to pay back the loan.
Assets you put up against the loan as a safeguard for the lender against defaulted payments.
This type of loan is Not backed by collateral. Higher interest rates. More risky.
unsecured loan
secured loan
na
na
This type of loan is Protected by collateral. Lower interest rates. Less risky.
unsecured loan
secured loan
na
na
Fixed Rate is?
if you default on your payments your co-signer is responsible for the payments.
not being able to make a payment or payments.
Stays the same throughout the duration of the loan term. Predictable with higher interest rates.
Can fluctuate depending on the index. Unpredictable with lower interest rates.
Variable Rate is?
if you default on your payments your co-signer is responsible for the payments.
not being able to make a payment or payments.
Stays the same throughout the duration of the loan term. Predictable with higher interest rates.
Can fluctuate depending on the index. Unpredictable with lower interest rates.
What does it mean to default on your loan?
if you default on your payments your co-signer is responsible for the payments.
not being able to make a payment or payments.
Stays the same throughout the duration of the loan term. Predictable with higher interest rates.
Can fluctuate depending on the index. Unpredictable with lower interest rates.
When applying for an automobile loan, the lender will check what 3c's?
Credit
Collateral
Capital
checks
When do you need a student loan?
To buy a car
To pay for college
To buy a house
To pay for your dinner
When do you need an auto loan?
To buy a car
To pay for college
To buy a house
To pay for your dinner
When do you need a mortgage?
To buy a car
To pay for college
To buy a house
To pay for your dinner
When do you need a credit card?
To buy a car
To pay for college
To buy a house
To pay for your dinner
When do you need a personal loan?
To buy a car
To pay for college
To replace your kitchen
To pay for your dinner
You want to buy a new house. What kind of loan do you need?
Auto Loan
Mortgage
Personal Loan
Credit Card
You want to buy a new truck. What kind of loan do you need?
Auto Loan
Mortgage
Personal Loan
Credit Card
You want to buy a new sweater. What kind of loan do you need?
Auto Loan
Mortgage
Personal Loan
Credit Card
You want a new swimming pool for your backyard. What kind of loan do you need?
Auto Loan
Mortgage
Personal Loan
Credit Card
You want to attend Gallaudet University. What kind of loan do you need?
Auto Loan
Student Loan
Personal Loan
Credit Card
Why do lenders charge interest? (Choose all that apply)
Because they are taking a risk by lending money.
Because the IRS makes them.
To make money.
To make it difficult for you to afford the things you want.
Why is a lien sometimes necessary for lenders? (Choose all that apply)
Because it gives the lender the ability to support the borrower if they are struggling to repay their debt.
Because the lender needs to lend the borrower more money.
Because it gives a lender the chance to recoup money when a borrower fails to pay their debt.
Because a borrower has not made payments on thier loan.
The price borrowers pay to use a lender's money.
Interest
Principal
Lien
Collateral
Personal loans are commonly used to pay for which of the following expenses? (Choose all that apply)
Emergencies
Medical Care
Weddings
Vacations
What can happen if a borrower defaults on their mortgage? (Choose all that apply)
The lender can take back the borrower's house.
The lender can repossess the borrower's car.
The lender can sell the house to recoup it's money.
The lender can sell the car to recoup it's money.
True or False: Typical payday loans cost 400% APR or more.
True
False
What makes payday loans risky?
They must be paid back by the borrower's next paycheck.
They have high interest rates.
They often have high fees.
They have adjustable rates.
Which of the following are characteristics of Predatory Loans? (Choose all that apply)
Charge low interest rates.
Terms that are misleading.
Target people that desperately need money and don't understand how borrowing works.
Charge high fees.
Threaten physical violence if you do not pay them back on time.
Which of the following are true about Cash Advances? (Choose all that apply)
Can have higher interest rates than regular purchases.
This predatory loan is obtained through your credit card.
The interest only accumulates after predetermined grace period.
Designed to be paid back long-term.
Which of the following are true about Pawnshop Loans? (Choose all that apply)
Have high interest rates and finance charges.
Are short-term loans based on the value of your collateral.
The pawnshop broker will keep your item and sell it for profit if you do not pay back the loan.
Additional fees can be charged for storing and insuring your item.
Borrowers should only pawn items that they are willing to lose in case they can not pay back the loan.
Why are private loans risky?
The interest rates are usually hard so the monthly payments are hard to manage.
There is too much paperwork to fill out and review. You may be signing something that puts you at financial risk.
The loans are not usually large enough to be financially beneficial.
You risk damaging relationships with family or friends.
Which of the following is the failure to pay back a loan?
Equity
Repossession
Default
Term
If you INCREASE the amount of your down payment, how will it affect the monthly payment?
The monthly payment will go down
The monthly payment will go up
the monthly payment will stay the same
What happens if you pay more than your minimum each month?
You will pay more interest over time.
You won’t have to repay the principal.
Your lender will forgive the loan.
You will repay the principal quicker.
When an individual borrows money, this is called ...
An investment
A term deposit
A loan
A share
What will NOT help you build your credit history?
Auto loan
Credit card
Debit card
Home mortgage
What term describes any arrangement where you get "stuff" (money, goods, services), and agree to pay for it in the future.
Credit
Loan
Principal
Collateral
A loan based on the value of personal property.
Rent‐to‐own loan
Pawn loan
Open‐end credit
Refund anticipation loan
Annual interest rates for alternative loans can be as high as 300%.
True
False
All lenders check a person’s credit report and score during the loan approval process.
True
False
If an individual does not meet the credit terms for a pawn loan, the lender will keep the property.
True
False
Evaluating the purpose of credit is an important consideration to using credit responsibly.
True
False
Depending on the credit terms, if a person has a late payment, consequences including higher interest rates, may occur.
True
False
Examples of when credit, if used responsibly, can be a positive. (Check All that Apply)
Credit can provide long‐term benefits such as the opportunity to earn a higher income as a result of investing in human capital.
Credit may allow individuals to make large purchases, such as an automobile, that allows them to get to and from work.
Having a credit card will allow an individual to make online purchases more securely and provide a source of open‐end credit in case of emergency.
Credit will not allow individuals to make large purchases, such as an automobile, that allows them to get to and from work.
Describe why a person is spending future income when using credit
When borrowing, individuals are spending their future income because they are committing to making payments for a specified
When borrowing, individuals are saving their future income because they are committing to making payments for a specified
Drew is considering purchasing a new vehicle. What are the things he should review closely on the contract? (Check all that apply)
Interest rate – What is the annual interest rate?
Fees- Are there fees associated with the application process and/or the use of the credit? Are there any
fees for repaying the loan early?
Missed or late payment- What does the credit contract indicate are consequences of missed or late payments?
Default- What is the consequence of not paying back in full the borrowed amount?
Location- Where is the credit institution located?
What is the amount remaining on an account
Balance owed
APR
Cash advance
Collateral
What is a business / financial institution that stores and manages money for individuals and other businesses?
A Bank
Credit card company
Auto finance company
The cash received when money is borrowed on a credit card. Typically involve special fees and higher interest rates than when used for purchases.
Cash Advance
Balance
Minimum Payment
Loan
These institutions offer credit cards.
Institution A's annual percentage rate is 13.74%.
Institution B's annual percentage rate is 11.99%.
Institution C's annual percentage rate is 17.9%.
Which institution would you choose to have a credit card with?
Institution A
Institution B
Institution C
What is an annual percentage rate (APR)?
The yearly rate charged for borrowing funds
The original amount borrowed
The total amount of the principal and interest over the term of the loan.
The tax rate charged on loans.
Why might someone prefer a fixed rate loan over a variable/adjustable rate loan?
The interest rate fluctuates, but always stays below 5%
The interest rate stays fluctuates, but you can earn money in the long-run.
The interest rate stays the same for 6 months and continually decreases over the life of the loan.
The interest rate never changes so there are no surprises in payment changes.
When you borrow money in the form of a loan or a credit card, you can end up paying more than the loan amount because you will pay ___ in addition to the loan amount.
rate
interest
principal
balance
Credit cards, which are issued by a bank or business, typically have a ______, which establishes a maximum amount cardholders can purchase using the card.
minimum payment
late fee
interest
credit limit
When you get your credit card bill, if you cannot pay the full amount, the credit card statement will note a _______ amount, which is the smallest amount the cardholder can pay each month in order to avoid fees and to maintain a good credit rating
minimum payment
credit limit
due date
balance
The _____ of a loan describes the length of time the borrower will have to repay the loan.
due date
term
interest rate
credit score
Short-term loans with high interest rates that give borrowers quick access to money are called ______, and they can quickly cause someone to have major financial trouble.
personal loans
debit cards
easy access loans
student loans
Semi-Annually means how many times a year?
4
2
1
6
Monthly means how many times a year?
4
12
52
365
Annually means how many times a year?
4
2
1
6
After learning about pay day loans, how likely are you to apply for one?
YOLO! I already downloaded the app.
I'd get one to buy myself nice things.
Only if I had no other option available.
Never.
APR is Death by Debt because:
You can pay interest over and over on the same money spent
Credit Cards typically have unreasonably high interest rates
Over time you may spend more on interest than on your original purchase
All of the above
Credit Cards are:
Dangerous if you cannot discipline your financial habits
Great tools for you to build your credit score
Solid ways to protect your purchases and keep good financial records
All of the above
Jake’s credit application has been declined because of his negative credit history. Which is most likely to be true?
Jake pays his bills consistently and on time.
Jake has applied for 4 credit cards and a car loan in the past 6 weeks.
Jake has received 3 traffic tickets in the past 2 months.
Jake holds 2 store credit cards, a bank credit card, a car loan, and a mortgage.
There’s no penalty if I pay my credit card balance after the due date.
True
False
The bank will take possession of your car if you .... your car loan.
pay off
default on
endorse
compute
