Answers FL-2102373-Personal Finance and Money Management HonorsCredit and Loans

Credit and Loans Answers

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Which statement is true of both mortgages and auto loans?

They are riskier than student loans for lenders.

They do not require a minimum payment.

They are secured loans and generally require a down payment.

They have higher interest rates than credit cards.

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good credita bank accounttax returns

good credit

a bank account

tax returns

principal borrowedoutstanding balanceprojected balance

principal borrowed

outstanding balance

projected balance

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

a person with a credit score of 800 with a large amount of debt who has recently switched to a lower-paying job

a person with a credit score of 760 with a small amount of debt who has had steady employment for many years

a person with a credit score of 650 with a large amount of available credit who has a low-paying, but steady job

a person with a credit score of 600 with a small amount of available credit who has recently switched to a high-paying job

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

$10 per year until the loan is paid off.

$15 per year until the loan is paid off.

$20 per year until the loan is paid off.

$25 per year until the loan is paid off.

A credit score is based in part on

employment and race.

income and location.

employment and trust.

payment history and total debt.

credit cardmortgagetaxbond

credit card

mortgage

tax

bond

What is a benefit of obtaining a personal loan?

getting money with special repayment terms

getting money with favorable interest rates

getting small amounts of money to use immediately

getting large amounts of money to use immediately

Read the scenario.Jay and Laura have been dreaming of purchasing their first home together. They've been diligently saving and have managed to accumulate a significant sum for a down payment.How does their decision to make a larger down payment benefit their financial situation as they purchase a home?

It increases the interest rate on the loan.

It decreases their credit score.

It increases the home’s value.

It decreases their monthly payment.

Which best describes a way people can use personal loans?

to buy a house

to buy a car

to pay for college

to pay for groceries

Which describes an example of using unsecured credit?

Someone buys new gutters for a home with a credit card.

Someone buys a new vehicle with a loan from a car dealer.

Someone buys a new home with a mortgage from a bank.

Someone buys a new boat with a loan from a boat dealer.

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

$10.00

$21.00

$33.10

$46.41

Which describes the difference between simple and compound interest?

Simple interest is paid on small, short-term loans, while compound interest is paid on large, long-term loans.

Simple interest is paid on the principal, while compound interest is paid on the principal and interest accrued.

Simple interest is paid on large, long-term loans, while compound interest is paid on small, short-term loans.

Simple interest is paid on the principal and interest accrued, while compound interest is paid only on the principal.

Consumers who pay more than the minimum payment on credit cards

pay less interest in the long run.

are able to buy more things.

see their credit scores decrease.

qualify for mortgages.

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

a credit card.

a personal loan.

an auto loan.

a mortgage.

A way to build good credit is

using only secured loans.

taking out many lines of credit.

paying bills when they are due.

using only credit cards.

What best determines whether a borrower’s interest rate on an adjustable rate loan goes up or down?

a fixed interest rate

a bank's finances

a market's condition

a person's finances

An example of secured credit is a

payday loan.

credit card.

mortgage.

medical bill.

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?

It shows that Casey prefers a high-interest rate.

It shows that Casey is committed to paying off the loan.

It shows that Casey may not need a loan at all.

It shows that Casey might refinance the loan soon.

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

employment history.

date of birth.

country of origin.

income tax returns.

Which describes the difference between secured and unsecured credit?

Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.

Unsecured credit is backed by an asset equal to the value of a loan, while secured credit is not guaranteed by a material object.

Secured credit is risky because banks cannot seize assets, while unsecured credit is less risky because it is backed by material objects.

Unsecured credit enables lenders to seize an asset if a loan is not paid, while secured credit prohibits lenders from taking material objects.

The chart shows a range of credit scores.

find it easy to get a loan.

find it hard to get a loan.

get a loan with low payments.

get a loan with low interest.

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