How Credit Works — Quiz

Question 1

What does the value of collateral or down payment affect? Choose three correct answers.

Revolt · Accepted Answer

the lender’s perceived risk; the amount borrowed; the interest rate

Question 2

APR on a loan may be adjusted based on a borrower’s

Revolt · Accepted Answer

credit history.

Question 3

Interest rates on credit cards

Revolt · Accepted Answer

can vary widely.

Question 4

Which type of loan most often involves long-term repayment over 30 years?

Revolt · Accepted Answer

mortgage loans

Question 5

What is collateral?

Revolt · Accepted Answer

property given as security for a loan

Question 6

Which types of credit are most similar to each other?

Revolt · Accepted Answer

auto loan and mortgage loan

Question 7

What consequences do borrowers face if they miss many payments? Choose three correct answers.

Revolt · Accepted Answer

difficulty getting loans; garnished wages; lost collateral

Question 8

Which best describes secured credit?

Revolt · Accepted Answer

It is backed by a valuable asset.

Question 9

What are the advantages of a strict repayment schedule? Choose three correct answers.

Revolt · Accepted Answer

It shows that the borrower is responsible.; It prevents additional fees from being charged.; It prevents some interest rate increases.

Question 10

What does the value of collateral or down payment affect? Choose three correct answers.

Revolt · Accepted Answer

the amount borrowed; the lender’s perceived risk; the interest rate

How Credit Works — Quiz Answers