WorksheetsDay 3 Understanding Debt
Total questions: 17
Worksheet time: 9mins
What is an amortization schedule?
A table that shows how a loan gets paid off over time.
A chart that tracks stock prices.
A list of monthly expenses.
A schedule for paying utility bills.
Which of the following is NOT shown in each row of an amortization schedule?
Your monthly payment
How much goes toward the interest
The remaining balance
Your credit score
In an amortization schedule, what does the principal refer to?
The original loan amount
The interest paid each month
The total amount paid over the loan
The monthly payment
Why is it important to know how much of your monthly payment goes toward interest versus principal in an amortization schedule?
It helps you understand how quickly you are paying off the loan.
It tells you your credit score.
It shows your monthly income.
It helps you calculate your taxes.
If you borrow a larger loan amount, what is likely to happen to your monthly payments or the length of time you pay?
You will pay more each month or for a longer time
You will pay less each month or for a shorter time
Your payments will not change
The interest rate will decrease
Why is it easier to pay off a loan quickly if you borrow less?
Because the total amount to be repaid is smaller
Because the interest rate is higher
Because the bank requires it
Because the loan term is fixed
A student is considering two loan options: one with a higher principal and one with a lower principal. Using your understanding of loan schedules, which option would make it easier for the student to pay off the loan quickly, and why?
The lower principal, because the total amount to be repaid is less
The higher principal, because the interest rate is lower
The higher principal, because the monthly payments are smaller
The lower principal, because the loan term is longer
If you choose a long loan term, what can you expect regarding your payments and total interest?
Smaller payments and more interest
Bigger payments and less total interest
Smaller payments and less total interest
Bigger payments and more interest
What does a low interest rate (APR) mean for your loan payments?
You’ll pay less overall.
You’ll pay more overall.
You’ll pay the same amount regardless of the rate.
You’ll pay no interest at all.
Why is it important to consider the interest rate (APR) when taking a loan?
It affects how much you pay in total.
It determines the color of your bank card.
It changes your loan into a grant.
It decides your credit score automatically.
What is the benefit of having a higher credit score?
You get a lower interest rate.
You get a higher interest rate.
You pay more fees.
You have fewer loan options.
Based on the credit score gauge shown, which range is considered "Excellent"?
300-629
630-689
690-719
720-850
the original amount of a loan; the total amount borrowed before interest
principal
loan
credit card
equity
What is a loan?
A fee for maintaining or servicing your loan account
Money you borrow but must also repay
Something valuable that you own and can sell for cash
The cost of borrowing money
When you pay back a loan, you not only pay the amount you borrowed, you also pay it back with _____________
Interest
Deposit
Withdrawal
Checking
The length of time given to repay a loan
term
balance
monthly payment
interest
The details of any loan will include the following 3 components:
The money you pay, the money the lender pays, and the principal
The principal, the interest rate, and the loan term
The mortgage, the auto loan, and the small business loan
The loan amount, the credit card payment, and the statement
