WorksheetsCredit & Debt Basics
Total questions: 20
Worksheet time: 8mins
The bank adds the interest to the .... to calculate the monthly payment of your loan.
principal
tenure
charge account
credit file
What did Mr. Fanelli and his wife NOT use the charge card for?
bought their furniture
bought tickets
bought airplane
went for vacation
My friend offered the bank his house as .... when he needed a loan.
collateral
debt
term
tenure
In the video we watched about PayDay lending, the expert says that "any other type of loan" is a better option than a payday loan.
True
False
Which type of student loan offers students the most benefits?
federal unsubsidized loan
federal subsidized loan
private student loan
mortgage loan
How do lenders make money by loaning it out?
They claim property to pay the loans.
They invest in the community of borrowers.
They charge interest on the principal amount borrowed.
Consumers can rely on the ____________ to compare loans because it is the TOTAL cost of borrowing money.
FDIC
AYR
APR
Emery applies for a loan online to help cover living costs while in college. Later, she notices her payments aren’t impacting the balance much. Looking closer, she finds extra fees in the agreement. Which type of predatory loan offer did Emery experience?
Bait and switch
Payday loan
Hidden fees
Phishing scam
The Brown family owns a house worth $300,000 and they still owe $150,000 on their mortgage. They want to use their equity to make some home improvements and so want to borrow money. How much equity do they have in their home?
$150,000
$250,000
$450,000
$300,000
Before you sign ANYTHING or a loan, it is important that you understand all the terms and conditions.
True
False
Each of the following represents an installment loan EXCEPT…
Home mortgage
Auto loan
Student loan
Credit card
Someone who will take over the loan for a borrower if the borrower fails to make payments is known as the _____________________.
co-signer
codependent
personal payer
best friend
The words that have similar meanings with borrower and not pay off are
debtor and repay
creditor and default
debtor and default
creditor and repay
The bank will take possession of your car if you .... your car loan.
pay off
default on
endorse
compute
Each of the following people has $5000 in debt. Which debt is most worthwhile?
Phil, who spent mostly on GoFundMe campaigns for people he saw on social media
Tyree, who took out a loan for an old used car so he can drive to and from campus
JJ, who used a credit card to pay his daily expenses while he was out of a job
It’s impossible to tell, because we don’t know how much they each valued the spending, how much it impacted their lives, or how easily they can repay the debt
Which of these actions would most likely decrease a person’s net worth for at least the next 6 months?
Use a loan to buy a brand new car
Work 10 hours of overtime each week and put all extra earnings into a savings account
Work 10 hours of overtime each week and use all extra earnings to pay down student loan debt
Open 3 new credit cards but don’t spend any money on them
A debtor is ....
a person who lends some money
a person who owes some money
a person who gives away money
a person who gives the loans
I don't owe the bank any more money because I've .... my loan.
defaulted on
paid off
computed
applied for
Which best describes the difference between secured and unsecured loans?
Secured loans require collateral, while unsecured loans do not
Secured loans usually have higher interest rates than unsecured loans
Secured loans do not appear on your credit report, while unsecured are reported
Secured loans have more flexible payment plans than unsecured loans
A personal loan is ....
principal that banks lend to businesses
principal that banks lend to an individual business
principal that banks lend to an individual person
principal that banks lend to buy a car
