Answers2027 Ignite Financial Literacy-Personal Finance - EL3403Credit and Loans

Credit and Loans Answers

19 verified answers4 views
1
Free Preview

Which statement is true of both mortgages and auto loans?

A
They are riskier than student loans for lenders.
B
They do not require a minimum payment.
C
They are secured loans and generally require a down payment.
D
They have higher interest rates than credit cards.
2
Free Preview

Read the scenario.Casey has been saving for a new car and is ready to make a purchase. Having a substantial amount to put down as a down payment, Casey approaches the car dealership. The salesperson and the loan officer view Casey's willingness to make a high down payment positively.Why would Casey be considered a lower risk by the lender for planning to make a high down payment?

A
It shows that Casey prefers a high-interest rate.
B
It shows that Casey is committed to paying off the loan.
C
It shows that Casey may not need a loan at all.
D
It shows that Casey might refinance the loan soon.
3

good credita bank accounttax returns

A
good credit
B
a bank account
C
tax returns
4

A credit score is based in part on

A
employment and race.
B
income and location.
C
employment and trust.
D
payment history and total debt.
5

In determining whether to issue a loan, banks are not allowed to ask about an applicant’s

A
employment history.
B
date of birth.
C
country of origin.
D
income tax returns.
6

The type of credit people are most likely to use for small purchases during their lifetime is

A
a credit card.
B
a personal loan.
C
an auto loan.
D
a mortgage.
7

credit cardmortgagetaxbond

A
credit card
B
mortgage
C
tax
D
bond
8

Which describes the difference between simple and compound interest?

A
Simple interest is paid on small, short-term loans, while compound interest is paid on large, long-term loans.
B
Simple interest is paid on the principal, while compound interest is paid on the principal and interest accrued.
C
Simple interest is paid on large, long-term loans, while compound interest is paid on small, short-term loans.
D
Simple interest is paid on the principal and interest accrued, while compound interest is paid only on the principal.
9

An example of secured credit is a

A
payday loan.
B
credit card.
C
mortgage.
D
medical bill.
10

The simple interest on a loan of $200 at 10 percent interest per year is

A
$10 per year until the loan is paid off.
B
$15 per year until the loan is paid off.
C
$20 per year until the loan is paid off.
D
$25 per year until the loan is paid off.
11

principal borrowedoutstanding balanceprojected balance

A
principal borrowed
B
outstanding balance
C
projected balance
12

A way to build good credit is

A
using only secured loans.
B
taking out many lines of credit.
C
paying bills when they are due.
D
using only credit cards.
13

What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate?

A
$10.00
B
$21.00
C
$33.10
D
$46.41
14

What is a benefit of obtaining a personal loan?

A
getting money with special repayment terms
B
getting money with favorable interest rates
C
getting small amounts of money to use immediately
D
getting large amounts of money to use immediately
15

The chart shows a range of credit scores.

Question illustration
A
find it easy to get a loan.
B
find it hard to get a loan.
C
get a loan with low payments.
D
get a loan with low interest.
16

For which buyer would a lender most likely approve a $200,000 mortgage?

A
a person with a credit score of 800 with a large amount of debt who has recently switched to a lower-paying job
B
a person with a credit score of 760 with a small amount of debt who has had steady employment for many years
C
a person with a credit score of 650 with a large amount of available credit who has a low-paying, but steady job
D
a person with a credit score of 600 with a small amount of available credit who has recently switched to a high-paying job
17

Consumers who pay more than the minimum payment on credit cards

A
pay less interest in the long run.
B
are able to buy more things.
C
see their credit scores decrease.
D
qualify for mortgages.
18

Which describes an example of using unsecured credit?

A
Someone buys new gutters for a home with a credit card.
B
Someone buys a new vehicle with a loan from a car dealer.
C
Someone buys a new home with a mortgage from a bank.
D
Someone buys a new boat with a loan from a boat dealer.
19

Which describes the difference between secured and unsecured credit?

A
Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.
B
Unsecured credit is backed by an asset equal to the value of a loan, while secured credit is not guaranteed by a material object.
C
Secured credit is risky because banks cannot seize assets, while unsecured credit is less risky because it is backed by material objects.
D
Unsecured credit enables lenders to seize an asset if a loan is not paid, while secured credit prohibits lenders from taking material objects.
20

The chart shows a range of credit scores.

Question illustration
A
find it easy to get a loan.
B
find it hard to get a loan.
C
get a loan with low payments.
D
get a loan with low interest.

Did you find these answers helpful?

More from this Course

Quiz
32 verified answers

Credit and Loans

Quiz
10 verified answers

Credit and Loans

Quiz
10 verified answers

Understanding Credit