WorksheetsECON UNIT 2 Review
Total questions: 37
Worksheet time: 19mins
Most banks will notify you and let you know that you are about to over draft.
True
False
It is common when buying a car or house that one puts down a payment before the loan.
True
False
A private student loan allows people to borrow more money than federal student loans.
True
False
Free banking means that you do not have to pay any fees associated with that account.
True
False
Keith's tuition, room & board, and fees for freshman year total $26,000. Using scholarships, grants, and Federal student loans, his financial aid package is $26,500. What option below is both realistic and financially responsible?
Keith should use the remaining $500 to cover all other expenses during freshman year
Keith should take out a private loan and limit himself to $8000 in other expenses freshman year
Keith should pick up a part-time job (during the academic year or during breaks) to cover remaining expenses
Keith should not choose this college because he cannot afford it
This is a loan that is backed by collateral.
Secured
Unsecured
Stafford
Principal
In order to qualify for financial aid, which form must you file?
FAFSA
Financial Aid Offer
EFC
SAR
This is an example of an unsecured loan.
Credit Card
Car Loan
Mortgage Loan
Certificate of Deposit
When filing your FAFSA, you’ll need each of the following documents EXCEPT...
Tax return from 2 years ago for you and your parents (in most cases)
Social Security card, driver’s license, or proof of permanent residency
Bank and/or investment statements (if applicable)
Proof of Employment
What is one advantage of Federal student loans?
Federal student loans do not need to be repaid
Federal student loans do not require you to complete the FAFSA
Federal student loans have lower credit standards (are easier to get) than private loans, which may require a co-signer
Federal loans don't charge any interest for the entire term of the loan
Which of the following is the most common type of unsecured loan?
Car Loan
Student Loan
Credit Card
Mortgage Loan
What is the range on a FICO credit score?
300-850
0-800
350-850
500-1000
This is what credit card companies must tell you about the terms of the card
Unbanked
Conditions
Credit Report
Diplomacy
You do not want to have a car loan for more than 5 years because the car loses value and this is called
Deductible
Decline
Appreciation
Depreciation
All of the following appear on your credit report EXCEPT...
Your checking account balance
Student loan payment history
Balance owed on a car loan
Number of active credit accounts
Which of the following categories make up most of your credit score?
Number of recent hard inquiries
Average length of your credit history
Number of active credit accounts
Payment history and credit utilization
It’s beneficial to use some of your available credit because...
The interest you’ll be charged goes up for every month you don’t use any credit
Banks require you to use some form of credit in order to have an account with them
It shows you can responsibly use credit and builds your credit history
Employers are less likely to hire you if you don’t have a balance on your credit card
In general, why do so many different types of companies check your credit report?
They’re legally required to do so by the Securities and Exchange Commission (SEC)
To determine the price of the product or service they’re selling you
Doing business with someone with a low credit score will also lower their credit score
They want to make sure you’re likely to make consistent and timely payments
If you were offered two auto loan options with the same principal and interest rate, but one was a 48-month loan and one was a 72-month loan, which outcome below will reflect the impact of that difference in term?
The 48-month loan will cost less money overall
The 48-month loan will have lower monthly costs
The 48-month loan will take longer to pay off
The 48-month loan will always be a better choice
Shonda’s mom recommends that she spend a year building her credit history and boosting her credit score before she applies for a loan to buy her dream car, which costs $54,000. Why is that good advice?
A good credit score will reduce her down payment
A good credit score will reduce her principal
A good credit score will reduce her interest rate
A good credit score will allow her to pay the full $54,000 in cash
Felix opens a credit card with no annual fee, so he assumes that using the credit card regularly will be absolutely free for the next two years while he finishes grad school. Why is his assumption incorrect?
Unless he pays the whole bill every month, he will pay interest according to his APR
He will automatically pay penalty fees if he uses his credit card for more than 3 consecutive months
If his grace period is any longer than 10 days, he will have to pay fees
He will need to pay a separate student fee because he is still in grad school
Each of the following represents an installment loan EXCEPT...
Home mortgage
Auto loan
Student loan
Credit card
All of the following statements about private student loans are true EXCEPT...
Part of the interest charged is subsidized by the U.S. government
You may need to start paying them back as soon as you accept them
Their interest rates can be variable or fixed
They are unlikely to be eligible for student loan forgiveness
How can having a mix of credit accounts, such as a mortgage, car loan, and credit cards, affect your financial flexibility?
It limits the amount of credit you can access
It can improve your creditworthiness by showing you can manage different types of credit
It makes financial management more complex
It has no effect on financial flexibility
What is a common consequence of not managing credit properly?
Increased credit score
Lower interest rates on loans
Higher borrowing costs
More frequent loan approvals
What does it mean when a loan is described as 'subsidized'?
The federal government pays the interest while you're in school at least halftime.
Interest starts accumulating immediately.
The loan is available only to graduate students.
The loan is offered to parents of dependent undergrads.
Which of the following is NOT a factor that affects your credit score?
Payment history
Credit utilization
Age of your first credit card
Number of dependents
A bank, savings and loan, credit union or dealership that makes loans to individuals or businesses.
Auto loan
Loan terms
Lender
Depreciation
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.
Any student can qualify for a subsidized loan
True
False
A student can get a federal student loan without a credit score
True
False
A parent can take out a federal student loan in their own name to pay for their kid's college.
True
False
If you get a federal student loan, your payments are expected to start ....
6 months after you are no longer attending school
right away
2 years after you are no longer attending school
3 years from when you took out the loan
An unsubsidized loan is one where ___________________ pays the interest while the student is still enrolled in school.
the borrower (i.e. student, parent)
the federal government
A subsidized loan is one where _____________________ pays for the interest while the student is still enrolled in school.
the federal government
the parents
the borrower
You will likely need a credit check and a cosigner for this loan.
Federal Loan
Private Loan
Both
