Q4. STUDENT LOANS

What is the initial amount of money loaned from the lender to the borrower called?

• Interest

• Collateral

• Repayment

• Principal

Which type of loan typically has a higher interest rate?

• Secured loan

• Unsecured loan

• Personal loan

• Credit card loan

What is collateral of a loan?

• The interest paid on the loan amount

• The lender providing the money

• Security for the lender in case of default

• The term of the loan

In the case of default on a secured loan, what can the lender do?

• Reduce the interest rate

• Take the collateral

• Extend the repayment period

• Forgive the loan amount

Which type of loan may result in the lender losing the money if the borrower fails to pay?

• Personal loan

• Credit card loan

• Secured loan

• Unsecured loan

How are banks able to generate revenue from loans?

• By charging interest on loans

• By investing in government securities

• By charging account maintenance fees

• By offering insurance products

What determines the interest rate a borrower receives on a loan?

• Type of loan only

• Credit rating only

• Both term length and credit rating

• Loan amount

Which type of loan does NOT require collateral?

• Secured loan

• Credit card loan

• Personal loan

• Home loan

What does a credit rating measure in relation to loans?

• Ability to make payments

• Maximum loan amount

• Bank location

• Type of loan

Which loan type has lower interest rates in regard to the term for repayment?

• Unsecured loan

• Long-term loan

• Secured loan

• Short-term loan