Credit

A longer term length will make your monthly payment lower and you will pay _______ interest when compared to a shorter term length and higher monthly payment. A. MORE B. LESS

A. MORE

The video advises you to "be a deadbeat." What does that mean? A. Pay your credit card bill in full and on time every single month, thus paying no interest or fees B. Make the minimum payment on your credit card on time each month C. Never open a line of credit so the credit card companies do not make any money

A. Pay your credit card bill in full and on time every single month, thus paying no interest or fees

Which word represents the total cost of the item you're purchasing on credit minus any down payment you make upfront? A. Principal B. Term C. Interest rate D. APR

A. Principal

If you were offered two auto loan options with the same principal and interest rate, but one was a 48-month loan and one was a 72-month loan, which outcome below will reflect the impact of that difference in term? A. The 48-month loan will cost less money overall B. The 48-month loan will have lower monthly costs C. The 48-month loan will take longer to pay off D. The 48-month loan will always be a better choice

A. The 48-month loan will cost less money overall

As the months progress on an amortized loan... A. The payments stay the same, but the principal is paid down more quickly B. The payments stay the same, but the principal is paid down more slowly C. The payment sizes decrease, but the principal is paid down at the same rate D. The payment sizes decrease, and the principal is paid down more quickly

A. The payments stay the same, but the principal is paid down more quickly

What type of marketing techniques do predatory lenders use? Hint: Choose two correct answers. A. They offer instant approval B. They require the borrower to have good credit C. They offer quick cash D. They require multiple financial documents and information to approve your loan

A. They offer instant approval and C. They offer quick cash

Felix opens a credit card with no annual fee, so he assumes that using the credit card regularly will be absolutely free for the next two years while he finishes grad school. Why is his assumption incorrect? A. Unless he pays the whole bill every month, he will pay interest according to his APR B. He will automatically pay penalty fees if he uses his credit card for more than 3 consecutive months C. If his grace period is any longer than 10 days, he will have to pay fees D. He will need to pay a separate student fee because he is still in grad school

A. Unless he pays the whole bill every month, he will pay interest according to his APR

Which of these actions would most likely decrease a person's net worth for at least the next 6 months? A. Use a loan to buy a brand new car B. Work 10 hours of overtime each week and put all extra earnings into a savings account C. Work 10 hours of overtime each week and use all extra earnings to pay down student loan debt D. Open 3 new credit cards but don't spend any money on them

A. Use a loan to buy a brand new car

A higher credit score... A. Will help you obtain a lower interest rate on an auto loan B. Will help you obtain a higher interest rate on an auto loan C. Has no impact on the interest rate on an auto loan

A. Will help you obtain a lower interest rate on an auto loan

If you can afford it, why is it a great idea to pay MORE than your amortized payment on a car, home, or other loan? Select all that apply. A. You will pay your loan off faster B. You will pay less total interest C. You will pay less total principal D. You will pay less money overall

A. You will pay your loan off faster, B. You will pay less total interest, and D. You will pay less money overall

Antonio has $4000 saved to use for a down payment, and he's about to buy a car that costs $29,000. How much would you expect his loan principal to be? A. $4000 B. $25,000 C. $33,000 D. $29,000 x his interest rate

B. $25,000

Casey has an amortized loan payment of $400, and the interest they owe for that month is $50. By how much does Casey pay down the principal? A. $50 B. $350 C. $400 D. $450

B. $350

If your credit card limit is $800 and your outstanding balance is $725, what is the largest amount you can charge on that card in the upcoming month? A. $0 B. $75 C. $725 D. $800

B. $75

Which statement best describes a Schumer box? A. The final calculation of how much you owe on your credit card bill each month B. A standardized way of presenting the key terms of your credit card agreement C. A legal document stating that you're behind on your credit card payments D. The outstanding balance on your credit card once you've made your recent payment

B. A standardized way of presenting the key terms of your credit card agreement

Which statement is true of both debit AND credit cards? A. Both can trap you in an endless cycle of debt if you're not careful B. Both allow you to make purchases in a store or online C. Both typically have interest rates between 10-30% D. Both require you to pay a minimum monthly payment when your bill arrives

B. Both allow you to make purchases in a store or online

According to the video, what is the first step in purchasing a new vehicle? A. Take multiple vehicles for a test drive to see what features you like best B. Create a budget and check your credit score C. Get an insurance quote for you new vehicle D. Decide which color vehicle you want most

B. Create a budget and check your credit score

Which statement most accurately describes the difference between leasing and owning a vehicle? A. Leasing is a term used when you purchase a car for the longest term possible B. Leasing a car is making monthly payments to use a car for a fixed period of time, but then you return it without owning it C. Leasing is a term used when you take the car for an initial test drive D. Leasing a car requires a very large down payment, while purchasing a car does not

B. Leasing a car is making monthly payments to use a car for a fixed period of time, but then you return it without owning it

Three of these statements reflect payday loans. Choose the other statement, which is aligned with a traditional bank loan instead. A. Easy to obtain without a lot of paperwork B. Requires a credit check and suitably high credit score C. Requires payment in full in less than a month D. APR can easily be over 200%

B. Requires a credit check and suitably high credit score

As you move through your payment schedule on an amortized loan, what will happen to the interest portion of each month's payment? A. The interest portion will grow B. The interest portion will shrink C. The interest portion will stay the same D. The interest portion will sometimes grow and sometimes shrink

B. The interest portion will shrink

How do the Annual Percentage Rates (APRs) on payday loans get to be so high? A. The loans go to affluent banking customers, so they charge a lot for the exclusivity B. The loan amounts are small, but the fees charged are relatively high and are renewed on a very short time-scale C. They make most of their money through ATM withdrawal fees as well as overdraft fees on checking accounts D. The amount of money people borrow using payday loans is typically quite high - $10,000 or more - so the fees are also high

B. The loan amounts are small, but the fees charged are relatively high and are renewed on a very short time-scale

Why is it more difficult to get out of debt when only paying the minimum payment? A. Your entire minimum payment goes toward principal and the interest continues to compound B. The majority of your minimum payment is going toward interest and finance charges and only a small amount toward the principal C. Your credit limit always resets, so you have a lot of spending power each month

B. The majority of your minimum payment is going toward interest and finance charges and only a small amount toward the principal

A fully amortized payment is split into which two components? A. The principal and the payment B. The principal and the interest C. The loan term and the interest D. The interest rate and the total interest

B. The principal and the interest

What causes the total amount of interest paid on a mortgage to be so much higher than on other types of debts? A. The APR on a mortgage is typically between 20-30%, which is higher than for other types of debt B. The principal on a mortgage is high and the term is long C. Borrowers typically delay making mortgage payments because their home cannot be repossessed for nonpayment D. Homeownership is not very common in the US, so mortgages are priced high because demand is so low

B. The principal on a mortgage is high and the term is long

How can making a larger down payment save you money when purchasing a car? (Choose two correct answers) A. Your monthly payment will be higher B. Your monthly payment will be lower C. You will pay less interest over the life of the loan D. You will pay more interest over the life of the loan

B. Your monthly payment will be lower C. You will pay less interest over the life of the loan

Shonda's mom recommends that she spend a year building her credit history and boosting her credit score before she applies for a loan to buy her dream car, which costs $54,000. Why is that good advice? A. A good credit score will reduce her down payment B. A good credit score will reduce her principal C. A good credit score will reduce her interest rate D. A good credit score will allow her to pay the full $54,000 in cash

C. A good credit score will reduce her interest rate

It's time for Roxanne to start repaying her student loans, which are amortized over the next ten years. Her first month's payment due is $396. How much should she expect to owe next month? A. Substantially less than $396 B. Slightly less than $396 C. Exactly $396 D. Slightly more than $396

C. Exactly $396

1. If you buy a $1000 bicycle, which credit card payoff strategy will result in your paying the LEAST total amount? A. Pay the minimum monthly payment B. Pay $100 per month for 10 months C. Pay $250 per month until it's paid off D. Don't make any payments until you have the full $1000 saved, regardless of how long that takes

C. Pay $250 per month until it's paid off

Which of the following statements about payday loans is TRUE? A. Payday loans usually have low interest rates B. Payday loans do not have any additional fees like other types of unsecured loans C. Payday loans get borrowers into a sometimes inescapable cycle of borrowing money because of the high interest rates and fees D. To qualify for a payday loan you must have a checking account and excellent credit score

C. Payday loans get borrowers into a sometimes inescapable cycle of borrowing money because of the high interest rates and fees

What is an outstanding balance? A. The amount you paid in your minimum payment B. The amount you spent in total C. The amount you still owe after you have made your most recent payment D. The amount you still have available in your line of credit

C. The amount you still owe after you have made your most recent payment

You're debating whether to buy a trendy fall jacket that costs a whopping $200! You have it sitting in your online cart, and you see there's a "Buy Now, Pay Later" option available for the jacket. Which best describes an example of how that would work? A. You pay the full $200 now, but they wait a month to send it to you, giving you the chance to cancel, penalty free, if you change your mind B. You pay $100 right now, you receive the jacket, and you owe $100 more a year later on the anniversary of your purchase date C. They ship you the jacket now, and you owe four $50 payments, once every 2 weeks, until the jacket is paid in full D. You reserve the jacket now, you pay as much or as little as you want in each payment, and when you eventually get to $200, they send you the jacket

C. They ship you the jacket now, and you owe four $50 payments, once every 2 weeks, until the jacket is paid in full

Which of the following is a good reason to choose a 30-year, fixed-rate mortgage? A. You want to make high monthly payments and close your mortgage sooner B. You want to minimize the amount of interest you'll pay over the life of the loan C. You want low, predictable monthly payments D. You want to take advantage of the ups and downs of the market and don't mind risk

C. You want low, predictable monthly payments

Based on what you've learned so far, what do you think is the average annual percentage rate (APR) on a payday loan? A. 0% B. 10% C. 30% D. 400%

D. 400%

Danya has found her dream home, and it's on the market for $200,000. Each of these is a way she can decrease the total amount she'll pay EXCEPT... A. Increase her down payment B. Qualify for a lower interest rate C. Choose a shorter loan term D. Choose a mortgage with a higher APR

D. Choose a mortgage with a higher APR

2. Each of the following represents an installment loan EXCEPT... A. Home mortgage B. Auto loan C. Student loan D. Credit card

D. Credit card

Each of the following people has $5000 in debt. Which debt is most worthwhile? A. Phil, who spent mostly on GoFundMe campaigns for people he saw on social media B. Tyree, who took out a loan for an old used car so he can drive to and from campus C. JJ, who used a credit card to pay his daily expenses while he was out of a job D. It's impossible to tell, because we don't know how much they each valued the spending, how much it impacted their lives, or how easily they can repay the debt

D. It's impossible to tell, because we don't know how much they each valued the spending, how much it impacted their lives, or how easily they can repay the debt

Which best describes how a credit card works? A. The credit card company extends you a line of credit. You then pay a small percentage of the cost of those purchases in one annual payment. B. The credit card company extends you a line of credit. You purchase "stuff" and the purchase gets directly paid with funds in your checking account. C. The credit card company extends you a line of credit. This is free money that you can use to purchase the "stuff" that you need. D. The credit card company extends you a line of credit. You purchase "stuff" and then have the choice to pay the balance in full or a minimum payment each month.

D. The credit card company extends you a line of credit. You purchase "stuff" and then have the choice to pay the balance in full or a minimum payment each month.

Why are payday loans so popular? A. They are a fast, easy way to save money and budget effectively B. They meet the need for quick cash for very large purchases such as cars and homes C. They are a terrific way to build your credit history and improve your credit score D. They are accessible to people who need to borrow small amounts of money and don't have any better options

D. They are accessible to people who need to borrow small amounts of money and don't have any better options

What is the advantage of paying your credit card balance in full each month? A. You will incur only a small "paid in full" fee on your next credit card statement B. You pay only a small amount of interest C. You have less of your credit limit available, therefore, less temptation to spend D. You avoid paying any interest and fees

D. You avoid paying any interest and fees