WorksheetsF24 - Credit Basics - TH
Total questions: 51
Worksheet time: 26mins
Name
Class
Date
1.
If your loan is secured by some collateral, you can usually get:
a)
More money
b)
Longer payback
c)
Lower interest rates
d)
All of these
e)
None of these
2.
Which of these is NOT a closed-end loan:
a)
Credit card
b)
Car loan
c)
Mortgage
d)
Student loan
3.
Payday lenders verify which two of these things before loaning money:
a)
Employment
b)
Source of income
c)
Credit score
d)
Debts to other lenders
4.
The loan amount for a Payday loan is $ _____ or less.
a)
15
b)
400
c)
600
d)
2 to 4
e)
500
5.
The time to pay back a Payday loan is typically about ____ weeks.
a)
15
b)
400
c)
600
d)
2 to 4
e)
500
6.
Which of these are reasons why borrowers often can't repay on time and have to keep rolling over or taking out new payday loans to cover the last loan:
a)
High fees
b)
Short terms
c)
Both of these
d)
Neither of these
7.
According to the CFPB, more than ______ % payday loans are reborrowed at least once:
a)
25 %
b)
80 %
c)
100 %
8.
According to the CFPB, about ______ % payday loans are reborrowed at least nine times:
a)
25 %
b)
80 %
c)
100 %
9.
Pawn shops usually loan you ______ your item is worth.
a)
More than
b)
less than
c)
the same as
10.
Prices at rent to own stores are ____ prices at stores where you pay cash or use a credit card.
a)
Higher than
b)
Lower than
c)
the same as
11.
Fees and interest rates at rent to own stores are ____ prices at stores where you pay cash or use a credit card.
a)
Higher than
b)
Lower than
c)
the same as
12.
People who take financial literacy in high school are ____ likely to use alternative credit.
a)
more
b)
less
c)
just as
13.
Which of these can help you avoid using alternative credit:
a)
An emergency fund
b)
Only borrowing money for needs - not for wants
c)
Learning the disadvantages of alternative credit
d)
All of these
e)
None of these
14.
Which of these are good alternatives to alternative credit:
a)
Building an emergency fund
b)
Only borrowing money for needs, not wants
c)
Either of these would reduce the odds that you will need alternative credit
d)
Neither of these would reduce the odds that you will need alternative credit
15.
Generally, your monthly debt payments (excluding mortgage payments) should be less than _____ % of your ____.
a)
10 %
b)
Monthly net income
c)
20 %
d)
30 %
e)
100 %
16.
Generally, your _____ should be less than 10 % of your ____.
a)
Monthly net income
b)
Monthly debt payment (other than mortgage)
c)
10 %
d)
20 %
e)
Total debt (other than mortgage)
17.
Generally, your _____ should be less than 20 % of your ____.
a)
100 %
b)
Total debt (other than mortgage or student loans)
c)
Total debt (other than mortgage)
d)
Annual net income
e)
Student loan debt
18.
Generally, your monthly rent should be less than _____ % of your ____.
a)
10 %
b)
Monthly net income
c)
20 %
d)
30 %
e)
100 %
19.
Generally, the amount you pay each year for your mortgage should be less than _____ % of your ____.
a)
Monthly net income
b)
20 %
c)
30 %
d)
Annual net income
e)
Student loan debt
20.
Generally, your student loan debt when you graduate college should be _____ % or less of your ____.
a)
Monthly net income
b)
30 %
c)
100 %
d)
Monthly debt payment (other than mortgage)
e)
Annual net income
21.
Generally, your _____ when you graduate college should be 100 % or less of your ____.
a)
Total debt (other than mortgage)
b)
Monthly debt payment (other than mortgage)
c)
Monthly debt (other than mortgage or student loans)
d)
Annual net income
e)
Student loan debt
22.
You should use your monthly debt payments (other than mortgage payments) when using which of these rules:
a)
10 %
b)
20 %
c)
30 %
d)
100 %
23.
You should use your total debt payments (other than mortgage or student loans) when using which of these rules:
a)
10 %
b)
20 %
c)
30 %
d)
100 %
24.
You should use your annual or monthly housing expenses when using which of these rules:
a)
10 %
b)
20 %
c)
30 %
d)
100 %
25.
You should use your starting annual salary when using which of these rules:
a)
10 %
b)
20 %
c)
30 %
d)
100 %
26.
Which of these are NOT true statements about Payday Loans
a)
Lenders charge a fee of about 15%
b)
The loans are usually short-term - about two weeks or so
c)
The borrower writes a post-dated check, or agrees to an automtic withdrawal from their bank account
d)
The lender earns a high return with a low risk
e)
The annual interest rate is about 15%, which is lower than the interest rate on most credit cards
27.
Your monthly debt payments (not including your mortgage) should be less than which of these:
a)
10% of your monthly net income
b)
20% of your annual net income
c)
30% of your annual net income
d)
20 % of your monthly net income
28.
Your total debt (not including your mortgage or student loans) should be less than which of these:
a)
10% of your monthly net income
b)
20% of your annual net income
c)
30% of your annual net income
d)
20 % of your monthly net income
29.
Your annual housing cost should be less than which of these:
a)
10% of your monthly net income
b)
20% of your annual net income
c)
30% of your annual net income
d)
20 % of your monthly net income
30.
If you write a bad check to a Payday Lender, all of these things can happen, EXCEPT . . . . .
a)
You can be charged for committing a crime
b)
The lender can charge you a $30 late fee
c)
You hurt your credit score
d)
Your bank can charge you an overdraft fee
31.
If your job earns you a net income of $48,000 per year, your monthly debt payments (other than your mortgage payment) should be less than $_______.
a)
400
b)
10,000
c)
15,000
d)
240
32.
If your job earns you a net income of $50,000 per year, your total debts (other than mortgage and student loans) should be $_______ or less.
a)
400
b)
10,000
c)
15,000
d)
240
33.
If your job earns you a net income of $50,000 per year, your annual housing costs should be $_______ or less.
a)
400
b)
10,000
c)
15,000
d)
240
34.
If a pawn shop charges you 20 % for a one-month loan, they are charging you a ____ % APR.
a)
400
b)
10,000
c)
15,000
d)
240
35.
The implied annual interest rate on rent-to-own merchandise is about ____ %
a)
9
b)
90
c)
900
d)
9000
36.
A washer-dryer pair will typically cost 50% ___ if you buy it at a big box store like Best Buy, instead of buying it at a rent-to-own store.
a)
Less
b)
More
37.
Most people that use rent-to-own stores are renting things that they:
a)
need
b)
want
c)
both need and want
38.
If a lender says "gauranteed approval" :
a)
they normally loan money to people who have no alternative
b)
they normally have high interest rates
c)
they normally loan money to people who did not have a financial literacy class in high school
d)
All of these are true
e)
None of these are true
39.
If a lender says "no credit check required" :
a)
they normally loan money to people who have no alternative
b)
they normally have high interest rates
c)
they normally loan money to people who did not have a financial literacy class in high school
d)
All of these are true
e)
None of these are true
40.
An emergency fund can help you avoid borrowing money for:
a)
Fixing your car
b)
Medical bills
c)
A shopping spree
41.
You are probably ignoring your future self if you borrow money for:
a)
Fixing your car
b)
Medical bills
c)
A shopping spree
42.
Which credit source charges the highest interest rates:
a)
Credit cards
b)
Car loans
c)
Mortgages
d)
Payday loans
43.
Which of the following statements about payday loans are TRUE?
a)
Payday loans usually have low-interest rates.
b)
Payday loans do not have any additional fees like other types of unsecured loans.
c)
Payday loans get borrowers in an inescapable cycle of borrowing money because of the high-interest rates and fees.
d)
To qualify for a payday loan you must have a checking account and excellent credit score.
44.
People who have a financial literacy class in high school are ____ to get payday loans.
a)
less likely
b)
more likely
c)
just as likely
45.
Which of these are true statements about how monthly interest expenses are calculated:
a)
The principal goes down each month,
b)
Interest expense is principal times interest rate
c)
Interest expense goes down each month
d)
All of these
e)
None of these
46.
Which of these do you pay back all at once, instead of over time:
a)
Payday loans
b)
Mortgages
c)
Car loans
d)
Student loans
47.
What are TWO reasons payday loans are considered predatory?
a)
Their high interest rates
b)
They use deceptive marketing tactics
c)
The don't use underwriting
d)
They make a profit from the loans they make
e)
They violate the law
48.
If you default on a payday loan, which of these can happen:
a)
A collection agency will try to collect the money from you
b)
The lender can put a lien on your house
c)
The lender can garnish your wages
d)
It can hurt your credit score
e)
All of these
49.
Which of these are often better than getting a payday loan:
a)
Sell some of your stuff
b)
Get a credit card
c)
Borrow money from friends or family
d)
All of these
e)
None of these
50.
Which of these is the most common outcome when a payday loan comes due:
a)
the lender cashes the check and there IS money in the account
b)
the lender tries to cash the check but there is NOT money in the account
c)
the borrower pays another fee to roll the loan over for another two weeks
51.
What can you do to avoid being in a financial bind that forces you to get a payday loan:
a)
Have an emergency fund
b)
Keep monthly debt payments at 10% or less of your monthly income
c)
Keep total debt 20% or less of your annual income
d)
Keep your housing expenses at 30% or less of your income
e)
All of these
100 %
