Understanding Loans and Financing Terms

Front

What is the term used to describe the original amount of money borrowed in a loan?

Back

Principal

Front

Which of the following is a measure of a borrower's ability to repay a loan? Credit score, Interest rate, Collateral, Capital

Back

Credit score

Front

What is the term for the percentage charged on a loan or paid on savings?

Back

Interest rate

Front

Value of an asset owned, minus the amount of any liabilities on that asset.

Back

Equity

Front

What is often required by lenders as security for a loan?

Back

Collateral

Front

Term for the process of paying back borrowed money over time.

Back

Repayment

Front

Wealth in the form of money or assets owned by a person or organization.

Back

Capital

Front

If a loan has a principal of $1,000 and an interest rate of 5% per annum, how much interest is owed after one year?

Back

$50

Front

Which of the following can negatively impact your credit score?

• Making timely payments
• High credit card balances
• Having a mix of credit types
• Low credit utilisation

Back

High credit card balances

Front

What is the term for the total amount of money that needs to be repaid on a loan, including both principal and interest?

Back

Total repayment