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WorksheetsCredit Quiz
Total questions: 37
Worksheet time: 20mins
What is the difference between a variable rate and a fixed rate?
A variable rate can change over time, while a fixed rate remains the same.
A variable rate is only applicable to mortgages, while a fixed rate can be used for any type of loan.
A variable rate is always higher than a fixed rate.
A variable rate is determined by the borrower's credit score, while a fixed rate is not affected by creditworthiness.
Define principal in the context of credit.
The term or duration of a loan
Original amount of money borrowed or outstanding balance of a loan
The interest rate on a loan
The monthly payment on a loan
What does the term 'interest' refer to in credit?
The amount of money borrowed
Cost of borrowing money or return on investment for lending money
The length of time the money is borrowed for
The process of repaying the borrowed money
Explain the concept of term in relation to credit.
A term in relation to credit refers to the fees associated with obtaining a loan or credit card balance.
A term in relation to credit refers to the maximum amount of credit a borrower can access.
A term in relation to credit refers to the interest rate charged on a loan or credit card balance.
A term in relation to credit refers to the length of time a borrower has to repay a loan or credit card balance.
What is a secured loan?
A secured loan is a type of loan that does not require collateral.
A secured loan is a type of loan that has a higher interest rate than unsecured loans.
A secured loan is a type of loan that is only available to individuals with a high credit score.
A secured loan is a type of loan that is backed by collateral.
Define an unsecured loan.
A loan that requires a high credit score.
A loan that is not backed by collateral.
A loan that is only available to businesses.
A loan that has a fixed interest rate.
What is a credit score?
A credit score is a numerical representation of an individual's creditworthiness.
A credit score is a rating given to individuals based on their social media activity.
A credit score is a measure of how much money a person has in their bank account.
A credit score is a number that represents a person's popularity among their peers.
What is the role of a cosigner in a loan?
A cosigner in a loan is someone who receives a portion of the loan amount as a fee.
A cosigner in a loan is someone who has no financial responsibility for the loan.
A cosigner in a loan is someone who can take over the loan without any consequences for the primary borrower.
A cosigner in a loan is someone who agrees to take on the responsibility of repaying the loan if the primary borrower is unable to make the payments.
Why is a down payment important in credit transactions?
To reduce the amount of money borrowed and lower the risk for the lender.
To discourage people from applying for credit transactions.
To make the transaction more complicated and time-consuming.
To increase the amount of money borrowed and increase the risk for the lender.
What is an installment loan?
A type of loan that is repaid over a set period of time with a fixed number of scheduled payments.
A loan that is only available to individuals with perfect credit.
A loan that has no interest or fees.
A loan that is repaid all at once in a single payment.
Which of the following is an example of a revolving credit?
Car Loan
Credit card
Mortgage
Bank Loan
How do you calculate NET Worth?
Amount in your bank account
Amount of things you own
Assests
Assets subtract Liabilities
What does APR mean?
What other fees does a credit card company charge? Select all that apply.
Late Payment Fees
Cash advance fees
Annual fees
Pretty card fees
What happens when you are late making a payment on your credit card? Choose all that apply.
What does it mean to be a deadbeat in terms of using a credit card?
What effect does paying only the minimum payment have?
In an installment loan your loan is amortized, this means that you pay the same amount each month.
True
False
A proportion of your payment in an amortized loan goes towards interest and a portion goes towards the principal. What statement is true in terms of the first few months of payment vs. the last few months of payment?
How can you decrease the amount of total interest you pay in an amortizing loan? Choose all that apply.
Pay a bit more than required each month
Ask the bank
Pay some one time payments - the earlier the better.
This is impossible to do
In Canada a mortgage is amortized for 30 years. Does that mean that you sign an agreement for 30 years?
Yes
No
What is used to calculate your mortgage?
Purchase price of house
Purchase price of house - downpayment
Purchase price of house + downpayment
Your Income
How can you find the total cost of an item is you are taking out a loan for that item? (ie a car)
Cost of car
Total Interest
Cost of car - downpayment
Cost of car - down payment + total interest
How can credit score affect your loans? (remember APR is annual percentage rate)
A high credit score can decrease your APR
A high credit score and increase your APR
A low credit score can decrease your APR
No impact
Which of the following does NOT affect your credit score?
Payment History
How much money you have borrowed
How long you have been borrowing money
The amount in your bank account
What is the typical APR for a place that offers pay day loans?
100%
50%
200%
400%
How do banks make money off of the credit they issue?
They charge a large, one-time fee at the start of the loan
They take out a small fee each month from your checking account
They charge a high interest rate on the loan
This is a trick question - they DON'T make money!
Which of the following could be a SECURED loan, where you have to put an item up for collateral? (hint: choose 2 correct answers)
Auto loan
Student loan
Mortgage
Overdraft
If the collateral for your secured loan can be taken away, why get a secured loan at all?
Because they usually have a higher interest rate
Because they usually have a lower interest rate
Banks give you an extra 90 days to make a missed payment
Banks typically don't charge interest for the first 12 months
What may NOT impact the interest rate on your loans?
Your relationship with the financial institution
Your credit score
The loan amount
Your level of education
True or False: A cosigner's credit history can be affected by the loan they are cosigned on.
True
False
Why does the amount of INTEREST you owe on a loan decrease over time?
The institution trusts you more, so they lower the interest
With each payment, principal increases; so interest lowers
Banks are legally required to lower interest rates over time
With each payment, principal decreases, so interest lowers
What information on a Schumer Box should you focus on when choosing a credit card? (hint: choose 3 correct answers)
The term of the credit card
Annual Percentage Rate (APR)
Grace Period
Fees
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Always make the minimum payment over time
Pay interest 1st, then pay what you can on leftover balance
Always make the full payment on time
Pay the principal 1st, then pay what you can on interest
Which is TRUE when you make only the minimum payment each month?
You ar charged interest on the remaining balance
Your credit line is restored to its maximum amount
Credit card companies have permission to sell your information
It is the fastest way to pay off your debt
When can personal loans be a better option than credit cards? (hint: choose 2 correct answers)
If you want to earn rewards and enjoy travel benefits
If you want a lower interest rate
If you want purchase protection & warranties
If you need a lump sum of money right away
Which is TRUE about Payday loans?
You can pay them back in installments
You are charged a 1-time fee for the loan which works out to be up to 400% interest.
Most people successfully pay these loans back
You need a credit card account to get one
