Understanding Loans and Financing Terms

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

• Interest

• Principal

• Equity

• Collateral

Which of the following is a measure of a borrower's ability to repay a loan?

• Credit score

• Interest rate

• Collateral

• Capital

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

• Equity

• Principal

• Interest rate

• Collateral

What is the term for the value of an asset owned, minus the amount of any liabilities on that asset?

• Equity

• Principal

• Capital

• Collateral

Which of the following is often required by lenders as security for a loan?

• Interest rate

• Principal

• Collateral

• Equity

What is the term for the process of paying back borrowed money over time?

• Capital

• Repayment

• Equity

• Interest rate

Which of the following refers to the wealth in the form of money or assets owned by a person or organization?

• Principal

• Capital

• Collateral

• Interest rate

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?

• $50

• $100

• $150

• $200

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

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

• Equity

• Total repayment

• Collateral

• Capital