Borrowing Basics
Just a pre test for borrowing information. I would like to see what we as a class know and do not know. Please try your best!
- 1.What is credit?
- A.
Money you borrow and must pay back
- B.
Free money that you do not have to pay back
- C.
Money you have saved for emergencies
- D.
The balance left on a gift card after you have used it to pay for something
- 2.Select all that apply. Maintaining good credit is important beacuse it:
- A.
Can help you graduate from college
- B.
Allows you to carry more cash than usual
- C.
Allows you to purchase large items like a car, house, or furniture and pay over time
- D.
Might cause your interest rates to be raised
- 3.What is a loan?
- A.
A charge by a financial institution for maintaining or servicing your loan account
- B.
Money you borrow but must also repay
- C.
Something valuable that you own and can sell for cash
- D.
The cost of borrowing money
- 4.Which type of loan is used to pay for personal expenses for you and your family? Select all that apply.
- A.
Consumer installment loans
- B.
Credit Cards
- C.
Home loans
- 5.A loan for which of the following is most likely to be unsecured? Select all that apply.
- A.
Home
- B.
Car
- C.
Furniture
- D.
Education (e.g. Student Loan)
- 6.Which of the following replaces a loan on your home in order to get a better interest rate?
- A.
Home equity loan
- B.
Home equity line of credit
- C.
Home refinance loan
- D.
Home purchase loan
- 7.What type of an interest rate stays the same?
- A.
Fixed rate
- B.
Variable rate
- C.
Waning interest
- D.
Dual rate
- 8.What should you review and compare when shopping for a loan?
- A.
Annual percentage rate (APR)
- B.
Fees
- C.
Truth in Lending Disclosures
- D.
All are true
- 9.What four factors do lenders generally use in their loan-making decision?
- A.
Collateral, capacity, capital, and whether you purchase their credit protection insurance
- B.
Capital, character, overdraft protection, and collateral
- C.
Capacity, capital, collateral, and character
- D.
Character, collateral, capacity, and credit limit
- 10.Getting credit is not cheap. However, which is usually the least expensive over time?
- A.
Rent-to-own services
- B.
Bank loan
- C.
Payday loan
- D.
Refund anticipation services
- 11.A home equity loan:
- A.
Replaces a mortgage at a lower interest rate
- B.
Has the same monthly payment
- C.
Is a loan designed for purchasing a house
- D.
Can be used to pay for any kind of expense
- 12.If someone offers you a loan, what can you do to make sure it is a good deal?
- A.
Check to make sure the loan provider is reputable
- B.
Shop around and compare all terms and conditions
- C.
Make sure you can afford the loan
- D.
All are true statements
- 13.Which of the following is a short-term loan secured by your expected income tax refund?
- A.
Payday loans
- B.
Rent-to-own services
- C.
Refund anticipation services
- 14.The Equal Credit Opportunity Act (ECOA):
- A.
Ensures you are no discriminated against (e.g., because of your race, color, or gender)
- B.
Requires lenders to notify you if you are denied a loan or credit
- C.
Requires creditors to promptly credit payments and correct billing mistakes
Back to top