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WorksheetsPersonal Finance Chap 4 Test Review
Total questions: 50
Worksheet time: 26mins
Something that credit card commercials don’t show you is . . .
People making payments for months or years on those credit card purchases
How much your credit score will grow right away
How happy your parents will be that they don’t have to lend you cash anymore
How great your life will be with payments
When a homeowner takes out a home equity line of credit (HELOC), that loan can only be used for home repairs and renovations.
True
False
Banks and lenders use credit scores to determine . . .
The likelihood that someone is able to repay debt
A person's financial responsibility
How much collateral someone has available to put up for a loan
How successful someone is
Making purchases with a credit card means that you’re borrowing money with interest, and ________ pay much higher interest rates.
Young people
Rich people
Old people
College graduates
When you finance a new car, you will end up paying more than the sticker price.
True
False
While it may not always appear so, the majority of Americans live paycheck to paycheck.
True
False
Your greatest tool to building wealth is _______________.
Tax cuts
Single stocks
Your income
Your credit score
_______________ require the borrower to put up collateral for the loan.
Unsecured loans
Interest rates
Revolving credit
Secured loans
Which of the following is part of the formula that determines a person's FICO score?
Their income level during a one year period
The percent of income that they invest into mutual funds
The dollar amount in their savings funds
Their history of payments made to lenders
There are certain things, like renting a car or booking a hotel room, that you cannot do without having a credit card.
True
False
Leasing a car is a method of financing where someone (a) .
What is The Second Foundation?
Get out and stay out of debt
Save a $500 emergency fund
Pay cash for your car
Build wealth and give
Credit card companies make the most profit from (a) .
Which is an example of an appreciating asset?
A computer used for business purposes
A new car purchased within the past 6 months
A piece of farming equipment
A home
Once you turn 18, you should regularly check your credit report . . .
For errors or signs of identity fraud
To make a plan for improving your credit score
To keep an eye on your credit score
Only if you have a credit card
Credit cards that offer flashy rewards like airline miles often . . .
Charge a high annual fee
Don't include protection against fraud
Can't be used for personal expenses
Have no interest fees
Car lease agreements come with a stipulation that you must pay a penalty if you ___________.
Go over the pre-established mileage cap
Drive the car out of state
Don’t park under a garage
Don’t wash the car before returning it
The debt snowball method involves . . .
Waiting until the winter months to begin paying off debt
Paying off debts from largest to smallest
Pooling together money from other people to pay off your debt
Paying off debts from smallest to largest
Loans that directly help you advance in life, such as student loans, are acceptable debts.
True
False
Predatory lenders get their negative reputation from . . .
Limiting the amount of time a borrower has to use a loan
Taking advantage of people during the Great Depression
Charging high fees for loans and targeting desperate people
Discreetly selling personal bank information
A credit score is an indicator of how well someone pays off their debt, not how well they handle money.
True
False
When you buy with credit, you typically spend more than you would with cash or a debit card.
True
False
The smartest way to buy a car is to _______________.
Lease it
Finance it but pay the debt as quickly as you can
Take out a personal loan for it
Pay for it in cash
What is the best way to avoid falling into debt?
Use credit to pay for large expenses now so that you have plenty of time to pay it off.
Only buy things that you can purchase with cash.
Use airline miles earned through a credit card to help pay for a vacation.
Take out a small loan for any purchases over $1,000.
Credit isn't a wealth-building tool, it's a business that makes money for . . .
Individuals who use credit cards
Stock market investors, tax agencies, and financial advisors
Local businesses and homebuilders
Credit card companies, banks, and lenders
A car is a depreciating asset.
True
False
When looking over your credit report, it's important to make sure . . .
No lines of credit have been opened under your name without your knowledge
Your credit score is over 700
At least five businesses have requested your credit report
The information listed is over 10 years old
Credit card companies charge stores a 2–3% fee for every purchase made with credit cards. This is called a(n) . . .
Merchant fee
Cash advance fee
Annual fee
Over-the-limit fee
The (a) is the total amount of the car loan, plus taxes and fees.
How you spend and give your money . . .
Can't be changed, even if you try
Is the most important thing in life
Is a reflection of your personal values
Doesn't matter until you're in your 40s
What is an example of an appreciating asset?
Computer equipment
A car
Stocks
Gaming systems
What is an example of a depreciating asset?
A car
Business interests
Personal property
Savings accounts
Is an auto loan unsecured?
Yes
No
Is a mortgage a secure loan?
Yes
No
In a loan, what is the "principal?"
The total amount paid by the end of the loan
Mr. Ivery
The amount borrowed
In a loan, what is "interest?"
The percentage of interest you have in getting a loan
The rate or percentage a lender charges you to borrow the money
The total amount to be paid to the lender
Why are secured loans considered less risky to the lender?
Lenders are allowed to conduct background checks for secured loans
Lenders can check your credit score before giving a secured loan, which they can't do for an unsecured loan
Lenders give secured loans all the time, so they're more comfortable doing them
Lenders can take valuable collateral if you fail to repay your loan
Having a good credit score, making a larger down payment, and finding a cosigner with good credit are all ways to…
Decrease your interest rate
Increase your term
Increase your total payments
Decrease your principal
What are two examples of collateral (pick 2)
vacation
house
education
car
How can you influence your FICO Score?
Paying bills on time
Avoiding excessive debt
Making smart credit choices
All of the above
What is the purpose of FICO Scores?
To help lenders make informed decisions
To provide fair access to credit
To keep the cost of credit lower
All of the above
Who uses FICO Scores?
Lenders
Insurance and utility companies
Credit card issuers
All of the above
Detailed plan of how you are going to use your money to pay for things you want and need.
Budget
Income
Periodic Expenses
Cash Flow
a lessening in value
debt consolidation
debt Snowball
Depreciation
finance charge
foreclosure
A fee for borrowing money, added to a monthly credit card bill.
debt consolidation
debt Snowball
Depreciation
finance charge
foreclosure
Teens are a huge target of credit card companies today.
True
Flase
Which of the following is not a good idea for getting out of debt?
Quit borrowing money
Get a part-time job or work overtime
Sell something
Borrow money from your parents to pay for the debt
Which of the following things cannot be done with a debit card but can be done with a credit card?
Go into debt
Rent a car
Purchase something online
Purchase an airline ticket
Which of the following is not a recommended step in the Drive Free method of purchasing a car?
Plan your purchase in advance using the sinking fund method of saving.
Place your savings in a mutual fund so that your money can make more money.
Start with an inexpensive car and gradually move up in car value as your savings increases.
Explore new car dealerships for the best interest rate.
What is paycheck garnishment?
A court-ordered attachment that allows a lender to take monies owed directly from a borrowerʹs
paycheck
Process of taking something back for failure to make payments
Process by which the holder of a mortgage sells the property of a homeowner who has fallen behind on payments
A legal procedure for dealing with debt problems of individuals and businesses
