Personal Finance - Debt Management Quiz

Liability represents an obligation to pay debts or fulfill financial commitments.

APR signifies the yearly cost of borrowing, including interest and fees.

Collateral is an asset offered as security to obtain a loan.

Defaulting on a loan is the failure to fulfill repayment obligations as outlined in the loan agreement.

A credit report provides a comprehensive record of an individual's credit history, including payment history and credit accounts.

A balloon payment is a sizable lump sum due at the end of a loan period.

Debt consolidation involves merging various debts into one, often with a lower interest rate.

Credit utilization ratio gauges the percentage of available credit being utilized.

A grace period allows interest-free repayment of credit card balances within a specified time.

The snowball method involves tackling debts by starting with the smallest balance and progressing to larger ones.

Debt-to-income ratio evaluates the proportion of income used to repay debts.

Debt settlement entails bargaining with creditors to settle debts for less than the full amount owed.

The debt-to-equity ratio compares a company's debt with its equity, indicating its financial leverage.

Bankruptcy is a legal process providing relief to individuals or businesses unable to repay their debts, offering a fresh financial start under court supervision.

Predatory lending involves offering loans with exploitative terms that benefit the lender at the expense of the borrower.