Unit 7 Test

Each of the following is an installment loan, except for a(n) __________, which is a revolving line of credit.

• Auto loan

• Credit card

• Mortgage

• Student loan

Keon plans to buy a new GMC Sierra for $47,000 at 5.5% APR. Which financing option would have the lowest total interest?

• 60-month term and $2,000 down payment

• 60-month term and $3,500 down payment

• 36-month term and $3,500 down payment

• 36-month term and $5,000 down payment

In order to take out federal student loans, you need to...

• Have a credit score above 600

• Complete and submit the FAFSA

• Choose a repayment plan before enrolling

• Take out at least $6000 in private student loans

Which of the following is an example of a secured debt?

• A credit card

• A student loan

• An auto loan

• A personal loan from family

Which of the following best describes a Schumer box?

• The portion of your monthly credit card bill that lists the minimum monthly payment due

• The portion of your credit card agreement that lays out the important rates and fees

• The portion of your credit card application that asks for your income and employment status

• The portion of a plastic credit card that holds the magnetic stripe or chip

What is the main difference between an annual interest rate and an annual percentage rate (APR)?

• APR is the interest rate combined with guaranteed fees

• APR is almost always lower than interest rate

• Interest rate is for loans, while APR is for credit cards

• Interest rate is money you earn on investments, while APR is money you pay for debt

For most American households, the largest source of debt is:

• Student loans

• Credit cards

• Medical debt

• Mortgages

If you fall behind on your loan payments, all of the following are recommended steps, EXCEPT:

• Calling your lender to negotiate a payment plan that fits your needs

• Reducing your spending to divert additional income towards loan payments

• Putting your past due loan payments on a credit card

• Find additional sources of income to help catch up on past due payments

All of the following affect the monthly payment amount of a mortgage EXCEPT...

• Down payment

• Interest rate

• Term of the loan

• The bank that issues the mortgage

Mason takes out $2700 in Direct Subsidized student loans during their first semester of college. Which of the following statements is true?

• Their loans will immediately start accruing interest once taken out

• Their loans will start accruing interest after graduation

• Their loans will enter repayment after one year

• Their loans will enter repayment when they start their first job