U2L20 Loan Basics

Front

The details of any loan will include the following 3 components: The principal, the interest rate, and the loan term

Back

The principal, the interest rate, and the loan term

Front

In a loan, what is the "principal?"

Back

The amount borrowed

Front

In a loan, what is "interest?"

Back

The rate or percentage a lender charges you to borrow the money

Front

The length of time for paying off a loan is called the _________ of the loan.

Back

term

Front

Why are secured loans considered less risky to the lender?

Back

Lenders can take valuable collateral if you fail to repay your loan

Front

Having a good credit score, making a larger down payment, and finding a cosigner with good credit are all ways to…

Back

Decrease your interest rate

Front

Each of these statements describes a variable rate loan EXCEPT... Typically starts with a lower interest rate than a fixed rate loan, Is riskier to the borrower because the interest rate could increase substantially, Can increase or decrease the interest rate over the course of the loan

Back

Is almost always a better option

Front

Fill in the blank: A _______ is someone other than the borrower who agrees to sign the loan document and repay the loan if the original borrower stops making payments

Back

cosigner

Front

What should you NOT consider before cosigning on a loan? Options: Do you have the same favorite sports team as the borrower?, Do you trust the borrower?, Can you afford to make the payments if the borrower can't?, Does the borrower make enough to afford the loan payments?

Back

Do you have the same favorite sports team as the borrower?