Loan Basics Quiz
Discover loan essentials with 10 questions covering APR, types of loans, interest rates, and more in this lending quiz.
#1
What does APR stand for in the context of loans?
Annual Payment Rate
Annual Percentage Rate
Annual Principal Return
Average Payment Return
#2
Which of the following types of loans typically have the lowest interest rates?
Personal loans
Payday loans
Mortgages
Credit card loans
#3
What is the term used to describe the amount of money borrowed from a lender?
Interest
Principal
Collateral
APR
#4
What is the difference between secured and unsecured loans?
Secured loans require collateral, while unsecured loans do not.
Secured loans have higher interest rates than unsecured loans.
Unsecured loans require collateral, while secured loans do not.
There is no difference between secured and unsecured loans.
#5
What is the debt-to-income ratio?
The ratio of debt to assets
The ratio of debt to income
The ratio of income to assets
The ratio of income to debt
#6
Which of the following factors typically affects the interest rate on a loan?
Credit score
Loan term
Income level
All of the above
#7
What is loan amortization?
The process of paying off a loan with a fixed repayment schedule in regular installments over time.
The process of extending the loan term to reduce monthly payments.
The process of increasing the interest rate on a loan.
The process of taking out a second loan to pay off the first loan.
#8
What is a balloon payment?
A payment made with a check
A large, lump-sum payment made at the end of a loan term
A payment made using a credit card
A payment made to reduce the principal amount
#9
What is the difference between a fixed-rate loan and an adjustable-rate loan?
Fixed-rate loans have a fluctuating interest rate, while adjustable-rate loans have a fixed interest rate.
Fixed-rate loans have a fixed interest rate, while adjustable-rate loans have a fluctuating interest rate.
Fixed-rate loans have higher interest rates than adjustable-rate loans.
There is no difference between fixed-rate and adjustable-rate loans.
#10
What is loan forbearance?
The act of cancelling a loan
The process of extending the loan term
The process of temporarily pausing or reducing loan payments
The act of transferring a loan to another lender
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