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WorksheetsChapter 9- Loans and Leases
Total questions: 60
Worksheet time: 30mins
Which term refers to a payment made to secure a rental agreement?
Depreciation
Collateral
Security deposit
Repossession
What does the acronym ARM stand for in the context of mortgages?
Adjustable-rate mortgage
Annual rate mortgage
Amortization rate mortgage
Assessment rate mortgage
What is the purpose of an escrow account?
To hold a security deposit
To manage mortgage payments
To store funds for taxes and insurance
To calculate depreciation
Do you think a car is an investment? Why or why not?
Yes, because it appreciates in value over time.
No, because it depreciates in value over time.
Yes, because it generates income.
No, because it has no resale value.
How does the price of a car affect the cost of car insurance?
Higher car price usually means higher insurance cost.
Lower car price usually means higher insurance cost.
Car price does not affect insurance cost.
Insurance cost is always the same regardless of car price.
What is a secured debt?
A debt with no collateral.
A debt backed by collateral.
A debt that is forgiven.
A debt that is unsecured.
Describe an installment loan and its purpose.
A loan paid in one lump sum.
A loan paid in regular installments over time.
A loan that does not require repayment.
A loan that is paid only at the end of the term.
What is an upside-down or underwater loan?
A loan where the borrower owes more than the asset's value.
A loan that is fully paid off.
A loan with no interest.
A loan that is forgiven.
Why would a person lease a car instead of buying a car?
To own the car immediately.
To have lower monthly payments.
To avoid any payments.
To increase the car's value.
Who pays the insurance on a leased car?
The leasing company.
The car manufacturer.
The person leasing the car.
The car dealership.
What is a security deposit?
A payment made to secure a loan.
A refundable payment made to cover potential damages.
A non-refundable fee for insurance.
A payment to reduce loan interest.
Why would a person get a mortgage?
To buy a car.
To purchase a home.
To pay for education.
To start a business.
What does it mean when a lender forecloses on property?
The lender forgives the loan.
The lender takes possession of the property.
The borrower pays off the loan.
The borrower sells the property.
What is depreciation in the context of buying a car?
Increase in car value over time
Decrease in car value over time
The cost of car maintenance
The interest on a car loan
What is an unsecured loan?
A loan with collateral
A loan without collateral
A loan for buying a house
A loan with a fixed interest rate
What does repossession mean?
Selling the car to another buyer
Taking collateral when a borrower fails to make payments
Increasing the interest rate on a loan
Reducing the loan amount
What is an installment loan?
A loan paid in a single payment
A loan paid in equal monthly payments over time
A loan with no interest
A loan for buying groceries
What should a contract state to avoid extra fees when paying off a loan early?
The total amount of interest
The absence of a prepayment penalty
The monthly payment amount
The loan term
Why might a lender require collateral?
To ensure the borrower has a backup plan
To secure the loan in case of default
To increase the loan amount
To reduce paperwork
What is the purpose of signing the car loan application form?
To agree to the loan terms
To provide a personal statement
To authorize a credit check
To confirm the car model
What is the destination fee range you might pay when buying a new car?
$100 to $200
$300 to $600
$700 to $900
$1000 to $1500
If the sales tax rate is 6% and the price of the car is $18,750, what is the sales tax amount?
$1,000.00
$1,125.00
$1,250.00
$1,500.00
What percentage of the car price is typically charged as DMV fees?
0.5%
1.2%
2.0%
3.5%
If the DMV fees are 1.2% of the car price and the car costs $18,750, what is the DMV fee amount?
$150.00
$225.00
$300.00
$375.00
What is the total amount you must pay for a car priced at $18,750 with a sales tax of $1,125 and DMV fees of $225?
$19,000.00
$19,500.00
$20,100.00
$20,500.00
What is the Kelley Blue Book?
A publication that lists the value of cars
A guide for car repairs
A magazine about car racing
A book about car history
What is the recommended maximum duration for a car loan?
Five years or less
Ten years
Seven years
Six years or less
If a new car has a sticker price of $21,300 and you trade in your old car valued at $2,750, what is the loan amount if the dealership gives you a loan of $18,500?
$18,500
$21,250
$19,000
$20,000
What should you consider before getting a car loan?
Monthly payment affordability
Color of the car
Brand of the car
Number of seats in the car
What is a car lease?
A contract to own a car
A contract to use a car in exchange for payment
A contract to sell a car
A contract to repair a car
Who is responsible for insurance and maintenance when leasing a car?
The dealership
The lessee
The bank
The insurance company
What is a security deposit in the context of leasing a car?
A fee for car insurance
An amount paid to protect the dealer against financial loss
A payment for car maintenance
A fee for car registration
What is the total cost to lease a truck for two years if the monthly payment is $275, the down payment is $500, and the security deposit is $550?
$6,600
$7,650
$7,400
$8,000
What is a common mileage limit for lease agreements annually?
10,000 miles
12,000 miles
15,000 miles
20,000 miles
Who has ownership of the car in a lease agreement?
Buyer
Lessor
Lessee
Dealer
What happens at the end of a lease term?
Buyer owns the car
Lessee returns car and has no ownership
Lessee keeps the car
Buyer sells the car
What is one thing you should do before getting a car loan?
Ignore the interest rates
Avoid reading the contract
Make sure you can make the payments
Skip calculating the cost of gas
Why might you need a cosigner for your first car loan?
To lower the insurance cost
To help with the loan if needed
To avoid paying for gas
To get a new car model
What percentage of their paychecks do many people spend on housing?
10 to 15 percent
20 to 25 percent
30 to 35 percent
40 to 45 percent
What is an apartment lease?
A contract outlining the conditions of renting an apartment
A document for buying a house
A guide for decorating an apartment
A list of apartment rules
How long is an apartment lease generally for?
One year
Six months
Two years
Five years
What does the lease state about monthly rent?
The amount and due date
The color of the apartment
The number of rooms
The type of flooring
What should you include when planning for your first apartment?
Renters insurance
A new car
A pet
A gym membership
Why is it important to know your fixed and variable expenses when renting an apartment?
To decide on the apartment's location
To determine how much money you have for rent
To find a roommate
To choose the apartment's color scheme
What should you do after selecting a location for your apartment?
Sign the lease immediately
Set up appointments to look at apartments
Move in without visiting
Ignore the budget
What might the property owner check before accepting your application?
Your favorite color
Your credit and ability to make monthly payments
Your cooking skills
Your vacation plans
What is a mortgage?
A type of secured loan used for buying property
A type of insurance for cars
A savings account for retirement
A loan for buying electronics
What is the process called when a lender takes possession of a house due to non-payment?
Refinancing
Foreclosure
Equity
Appraisal
What is equity in terms of home ownership?
The total amount of the loan
The difference between what you owe and the market value
The interest rate on the loan
The insurance premium
What does PMI stand for in the context of home loans?
Private Mortgage Insurance
Public Money Investment
Personal Money Insurance
Property Market Investment
What is an escrow account used for when buying a home?
To hold money in trust for taxes and insurance payments
To pay off the entire mortgage at once
To invest in the stock market
To buy furniture for the new home
What is a fixed-rate mortgage?
A loan with an interest rate that changes monthly
A secured loan with an interest rate that does not change
A loan that can be paid off in any currency
A loan with a decreasing interest rate
What is amortization in the context of a mortgage?
The process of increasing the interest rate
The process of making equal payments to reduce the principal
The process of paying off the loan in a lump sum
The process of refinancing the mortgage
Why is it important to do research before buying a house?
To find the cheapest house available
To understand the neighborhood and community
To avoid paying any taxes
To ensure the house is close to a shopping mall
What is an adjustable-rate mortgage (ARM)?
A loan with a fixed interest rate
A loan with an interest rate that can change periodically
A loan with no interest rate
A loan with a decreasing interest rate
What is a potential risk of an adjustable-rate mortgage?
The interest rate is guaranteed to decrease
Monthly payments may increase to an unaffordable level
The interest rate is fixed for the life of the loan
The loan amount decreases over time
What is a benefit of a fixed-rate mortgage compared to an adjustable-rate mortgage?
The interest rate can increase
Payments are guaranteed not to increase
The loan amount is higher
The interest rate changes monthly
What is an HOA fee used for?
Buying groceries
Paying for vacations
Upkeep of buildings and common areas
Purchasing new furniture
What is the role of a homeowners association (HOA)?
To manage and maintain common areas and enforce community rules
To provide personal loans to homeowners
To sell properties within the community
To offer insurance for individual homes
If your condo mortgage payments are $633.45 monthly, and you pay $27.50 for PMI and $73.25 for HOA fees each month, what are your total monthly fixed condo expenses?
$734.20
$733.45
$734.95
$735.00
