Credit and Debt
by Stephanie Foy
| 5 Questions
Note from the author:
You are trying to determine which 36-month simple interest loan is the best deal. Which should you use to compare the loans?
the annual percentage rate on the loan
whether the lender is close your home
your credit score
the number of months of the loan
Which of the following is the LEAST important factor in determining a person's creditworthiness?
previous ownership of a home
capacity to repay the loan
character (credit score)
whether the borrower has collateral
James needs to borrow $5000 to put toward a used car. Which of the following would most likely offer him the lowest interest rate on a loan?
Taking out an extended loan from a pay day lender
Using his car as collateral at a title pawn lender
An installment loan from a bank or credit union
Putting the $5000 on a credit card
Many financial advisors say that a fixed rate of interest is better than a variable rate. Why is this?
A fixed rate will always be lower than a variable rate.
A fixed rate builds your credit score more than a variable rate.
A fixed rate is easier to refinance than a variable rate.
A fixed rate gives you constant, predictable payments.
Sarah is shopping for an auto loan. Financial institution A offered her a loan with a 6% simple interest rate. Financial institution B offered her a loan with a 6% compound interest rate. Which loan would be the least costly for Sarah?
More information is needed to make a determinination.
Both loans would cost the same because they each have a 6% interest rate.
Financial institution B's loan would cost less because it has compound interest.
Financial institution A's loan would cost less because it has simple interest.
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