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Financial Literacy Exam 3 Questions and Answers
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Sources of personal loans include - Answer-commercial banks, savings institutions, finance companies, and credit unions. Loan agreements with family and friends should - Answer-be in writing and signed by all parties. The personal loan process involves - Answer-submitting the application, neg...

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  • October 12, 2024
  • 9
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • financial literacy exam 3 questions and answers
  • sources of personal loans include answer commerc

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  • Financial Literacy
  • Financial Literacy

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Financial Literacy Exam 3 Questions and
Answers
Sources of personal loans include - Answer-commercial banks, savings institutions,
finance companies, and credit unions.

Loan agreements with family and friends should - Answer-be in writing and signed by all
parties.

The personal loan process involves - Answer-submitting the application, negotiating the
loan contract, and negotiating the interest rate.

In the loan application process, the information the borrowers must supply to the
lenders is - Answer-a personal balance sheet and a personal cash flow statement

From the personal cash flow statement, lenders can determine - Answer-if borrowers
have sufficient cash flow to cover their loan payments.

Collateral includes - Answer-assets used to back a loan in the event that the borrower
defaults.

Loans backed by collateral are called: - Answer-secured loans

Interest rates are usually - Answer-lower on secured loans because the lender has less
to lose in the event the loan is not repaid

Which of the following explains the difference between a 10% rate charged on a payday
loan and a 10% rate charged by a bank on a personal loan? - Answer-Personal loans
are based on APR standards and payday loans are not.

If you cosign a loan - Answer-you can be required to pay the balance of the loan not
repaid by the borrower.

If you fail to live up to your responsibilities as a cosigner, - Answer-it may restrict the
amount you can borrow.

The annual percentage rate (APR) measurement: - Answer-calculates both interest and
other fees on a loan on an annualized basis.

Could lenders with the same interest rate report different APRs? - Answer-Yes,
depending on the other fees charged.

Simple interest is - Answer-computed as a percentage of the existing loan amount.

, Simple interest is measured using the principal - Answer-the interest rate applied to the
principal, and the loan's maturity.

What information is not contained in a loan repayment schedule? - Answer-A
comparison of your interest rate and the current interest rate

Loan payments under the simple interest method are usually lower than loan payments
under the add-on interest method because the: - Answer-interest is calculated on the
remaining balance.

The most important financial criteria that should be considered when buying a car is -
Answer-the price is within your budget.

The financial criteria that is the least important is: - Answer-the minimum advertised
price.

Purchasing a new car online is not as efficient as buying a new car at a dealership
because - Answer-you cannot ask specific questions as you shop, you cannot enforce
delivery terms

The first step in financing a car purchase is to - Answer-determine the amount of
monthly payment you can afford.

Aside from the interest rate, the two factors that will have the largest impact on the size
of your monthly payment are: - Answer-the amount borrowed and the length of the loan.

Which of the following is not one of the disadvantages of leasing a car? - Answer-Your
equity in the car is limited to your lease payments.

Student loans are typically extended by - Answer-the federal government or one of the
financial institutions that participate in student loan programs.

Which of the following is a characteristic of a student loan? - Answer-The tax benefits
are phased out for individuals who are in high tax brackets.

Home equity is - Answer-the difference between the market value of the home and the
debt on the home.

A home equity loan is: - Answer-a line of credit that allows the homeowner to borrow
against the equity in their home.

Interest rates for home equity loans are: - Answer-variable and determined by the loan
contract.

Borrowers prefer home equity loans to other loans because: - Answer-the interest rates
are lower, since the home serves as collateral for the loan.

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