WorksheetsCredit Basics - S25TH
Total questions: 74
Worksheet time: 37mins
Name
Class
Date
1.
True or False. Alternative credit usually has lower interest rate and other terms that are good for the borrower.
a)
True
b)
False
2.
True or False. Secured loans usually have less risk for the lender than unsecured loans.
a)
True
b)
False
3.
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
4.
True or False. For closed- ended loans, the date that the loan must be paid off in full is fixed.
a)
True
b)
False
5.
Which of these is NOT a closed-end loan:
a)
Credit card
b)
Car loan
c)
Mortgage
d)
Student loan
6.
True or False. Interest rates on student loans are low because there is collateral that secures the loan:
a)
True
b)
False
7.
Payday lenders verify which of these things before loaning money:
a)
Employment
b)
Checking account
c)
Credit score
d)
Debts to other lenders
8.
The loan amount for a Payday loan is $ _____ or less.
a)
15
b)
400
c)
600
d)
2 to 4
e)
500
9.
The time to pay back a Payday loan is typically about ____ weeks.
a)
15
b)
400
c)
600
d)
2 to 4
e)
500
10.
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
11.
According to the CFPB, more than ______ % payday loans are reborrowed at least once:
a)
25 %
b)
80 %
c)
100 %
12.
According to the CFPB, about ______ % payday loans are reborrowed at least nine times:
a)
25 %
b)
80 %
c)
100 %
13.
True or False. If you don’t pay back a loan from a pawn shop, the shop will keep the item that you pawned.
a)
True
b)
False
14.
Pawn shops usually loan you ______ your item is worth.
a)
More than
b)
less than
c)
the same as
15.
True or False. The pawn shop will pay you if they sell your pawned item for more than they loaned you.
a)
True
b)
False
16.
True or False. In general, businesses that target customers with poor credit charge high fees and interest rates.
a)
True
b)
False
17.
True or False. In general, businesses that say "gauranteed approval" charge high fees and interest rates.
a)
True
b)
False
18.
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
19.
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
20.
True or False. The rent-to-own industry targets people with low incomes, bad credit, and little or no financial education.
a)
True
b)
False
21.
True or False. If you only buy what you actually need, you will probably find you don’t actually need to rent-to-own anything.
a)
True
b)
False
22.
People who take financial literacy in high school are ____ likely to use alternative credit.
a)
more
b)
less
c)
just as
23.
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
24.
True or False. Alternative credit is a better alternative than the the traditional credit - like mortgages and car loans and credit cards.
a)
True
b)
False
25.
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
26.
True or False. When you borrow, you are spending future income.
a)
True
b)
False
27.
True or False. Failing to manage your credit can decrease your future quality of life and financial well-being.
a)
True
b)
False
28.
True or False. A loan is a legal contract.
a)
True
b)
False
29.
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)
Annual net income
30.
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)
30 %
31.
Generally, your _____ should be less than 20 % of your ____.
a)
Total debt (other than mortgage or student loans)
b)
Annual net income
c)
10 %
d)
Monthly net income
e)
20 %
32.
Generally, your monthly rent should be less than _____ % of your ____.
a)
Monthly net income
b)
30 %
c)
10 %
d)
20 %
e)
100 %
33.
Generally, the amount you pay each year for your mortgage should be less than _____ % of your ____.
a)
10 %
b)
20 %
c)
30 %
d)
100 %
e)
Annual net income
34.
Generally, your student loan debt when you graduate college should be _____ % or less of your ____.
a)
10 %
b)
20 %
c)
30 %
d)
100 %
e)
Annual net income
35.
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
36.
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 %
37.
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 %
38.
You should use your annual or monthly housing expenses when using which of these rules:
a)
10 %
b)
20 %
c)
30 %
d)
100 %
39.
You should use your starting annual salary when using which of these rules:
a)
10 %
b)
20 %
c)
30 %
d)
100 %
40.
True or False. If you don't pay back the loan from a pawn shop, it will lower your credit score.
a)
True
b)
False
41.
True or False. If you pay back the loan from a pay day loan store, it will increase your credit score.
a)
True
b)
False
42.
True or False. If you default on your payments to a rent to own store, it will hurt your credit score.
a)
True
b)
False
43.
True or False. If you make all your payments on time to a rent to own store, it will help your credit score.
a)
True
b)
False
44.
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)
Most borrowers roll the loan over for another two weeks
d)
The borrower writes a post-dated check, or agrees to an automtic withdrawal from their bank account
e)
The annual interest rate is about 15%, which is lower than the interest rate on most credit cards
45.
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
46.
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
47.
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
48.
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
49.
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
50.
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
51.
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
52.
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
53.
The implied annual interest rate on rent-to-own merchandise is about ____ %
a)
9
b)
90
c)
900
d)
9000
54.
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
55.
True or False. Most rent-to-own customers know the prices and interest rates they are paying , because federal law requries full disclosure of that information.
a)
True
b)
False
56.
Most people that use rent-to-own stores are renting things that they:
a)
need
b)
want
c)
both need and want
57.
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
58.
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
59.
An emergency fund can help you avoid borrowing money for:
a)
Fixing your car
b)
Medical bills
c)
A shopping spree
60.
You are probably ignoring your future self if you borrow money for:
a)
Fixing your car
b)
Medical bills
c)
A shopping spree
61.
Which credit source charges the highest interest rates:
a)
Credit cards
b)
Car loans
c)
Mortgages
d)
Payday loans
62.
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.
63.
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
64.
True or False. Of those who have used buy-now, pay-later services, very few have had to pay some kind of late fee.
a)
True
b)
False
65.
True or False. There’s a risk that buy now, pay later will urge people to overspend, particularly with rising inflation.
a)
True
b)
False
66.
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
67.
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
68.
True or False. It is hard to find a place where you can get a payday loan.
a)
True
b)
False
69.
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
70.
True or False. Before making a loan, federal law requires payday lenders to find out whether the borrower is able to repay the loan on time.
a)
True
b)
False
71.
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 sue you
c)
The lender can garnish your wages
d)
It can hurt your credit score
e)
All of these
72.
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
73.
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
74.
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 %