WorksheetsUnit 7 Exam - Credit
Total questions: 21
Worksheet time: 11mins
Name
Class
Date
1.
The details of any loan will include the following 3 components:
a)
The principal, the interest rate, and the loan term.
b)
The money you pay, the money the lender pays, and the principal.
c)
The mortgage, the auto loan, and the small business loan.
d)
The loan amount, the credit card interest, and the statement.
2.
Each of the following is an installment loan, except for a(n) ___________, which is a revolving line of credit.
a)
Auto loan
b)
Credit card
c)
Mortgage
d)
Student loan
3.
Keon plans to buy a new GMC Sierra for $47,000 at 5.5% APR. Which financing option would have the lowest total interest?
a)
60-month term and $2,000 down payment
b)
60-month term and $3,500 down payment
c)
36-month term and $3,500 down payment
d)
36-month term and $5,000 down payment
4.
In order to take out federal student loans, you need to…
a)
Have a credit score above 600
b)
Complete and submit the FAFSA
c)
Choose a repayment plan before enrolling
d)
Take out at least $6000 in private student loans
5.
Which of the following is an example of a secured debt?
a)
A credit card
b)
A student loan
c)
An auto loan
d)
A personal loan from family
6.
Each of these statements describes a variable rate loan EXCEPT...
a)
Typically starts with a lower interest rate than a fixed rate loan
b)
Is riskier to the borrower because the interest rate could increase substantially
c)
Is almost always a better option
d)
Can increase or decrease the interest rate over the course of the loan
7.
For most American households, the LARGEST source of debt is:
a)
Student loans
b)
Credit cards
c)
Medical debt
d)
Mortgages
8.
If you fall behind on your loan payments, all of the following are recommended steps, EXCEPT…
a)
Calling your lender to negotiate a payment plan that fits your needs
b)
Reducing your spending to divert additional income towards loan payments
c)
Putting your past due loan payments on a credit card
d)
Find additional sources of income to help catch up on past due payments
9.
All of the following affect the monthly payment amount of a mortgage EXCEPT…
a)
Down payment
b)
Interest rate
c)
Term of the loan
d)
The bank that issues the mortgage
10.
Mason takes out $2700 in Direct Subsidized student loans during their first semester of college. Which of the following statements is true?
a)
Their loans will immediately start accruing interest once taken out
b)
Their loans will start accruing interest after graduation
c)
Their loans will enter repayment after one year
d)
Their loans will enter repayment when they start their first job
11.
What is one way to guarantee you don’t pay interest on your credit card?
a)
Pay your entire balance in full every month
b)
Pay your minimum monthly payment on time
c)
Spend less than your credit limit
d)
Only make new purchases every other month
12.
After much shopping, Kelli found a car she’d love to buy. When it comes time to talk about financing, the salesperson at the dealer says, “I can offer you 6% on $24,000 for 5 years.” What do each of those numbers mean?
a)
6% is the term, $24,000 is the down payment, 5 years is the interest rate
b)
6% is the term, $24,000 is the interest rate, 5 years is the principal
c)
6% is the interest rate, $24,000 is term, 5 years is the principal
d)
6% is the interest rate, $24,000 is the principal, 5 years is the term
13.
Moto has a $7000 credit card balance, and he cannot afford to pay it all off at once. The larger his monthly payments…
a)
The longer it will take to pay it off and the smaller total interest he’ll pay
b)
The longer it will take to pay it off and the larger total interest he’ll pay
c)
The shorter it will take to pay it off and the smaller total interest he’ll pay
d)
The shorter it will take to pay it off and the larger total interest he’ll pay
14.
May is taking out student loans to pay for college. Why might she take out private student loans in addition to federal student loans?
a)
She is ineligible for some federal student loans due to her parents’ low credit scores
b)
She wants her private student loan balance to be forgiven under the Public Service Loan Forgiveness program
c)
She needs more funding than is available through federal student loans
d)
She wants to take advantage of the lower interest rates offered by private student loans
15.
What makes an annual percentage rate (APR) different from an annual interest rate?
a)
APR includes interest plus any fees
b)
The base interest rate charged on a credit card
c)
How long you take a loan out for
d)
The amount of money that you are borrowing
16.
Nasir just got a letter from his credit card company that the terms of his agreement are changing. In the fine print, he notices that his interest will now be compounded daily instead of monthly. Nasir expects that his total interest will...
a)
Increase due to more frequent compounding
b)
Decrease due to more frequent compounding
c)
Stay the same because the compounding frequency has no effect on interest
d)
Increased by an additional $365
17.
Why do lenders look at credit reports?
a)
To determine the size of your household
b)
To provide them with details about your savings account
c)
To decide whether you are a qualified or risky candidate for credit
d)
To edit your credit score
18.
All of the following may be included on your credit report, EXCEPT…
a)
On-time credit card payments
b)
Unpaid bills in collections
c)
Student loans
d)
Bank account balance
19.
Cammy requests a copy of her credit report and discovers an error: her listed address is incorrect. What should Cammy do about this error?
a)
She should pay off and close as many of her credit accounts as possible within 30 days
b)
She should contact a lawyer who can sue the credit bureau to get the error corrected
c)
She should report the error to the credit bureau and consider placing a red flag or freeze on her credit report
d)
Nothing - she can’t correct the error because credit reports can only be updated by financial or government institutions
20.
What is the advantage of paying your credit card bill in full each month?
a)
You earn interest on your line of credit and maintain a good credit score
b)
There is no advantage to paying your credit card bill in full each month
c)
You decrease your credit limit and the temptation to spend while also maintaining a good credit score
d)
You do not have to pay interest or additional fees and maintain a good credit score
21.
What does your employer need to have in order to view your credit report?
a)
Your Written Consent
b)
Your Social Security Number
c)
Your Pay Stub
d)
Cash Money
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