What is an unsecured loan?
A) a debt whose repayment is guaranteed by a pledge of something of value or a guarantor
B) a payday loan
C) a mortgage loan
D) a car lease
A) a debt whose repayment is guaranteed by a pledge of something of value or a guarantor
What is a peer-to-peer loan?
A) a loan from one entity electronically matched to another entity without a financial institution in the middle
B) a short-term loan at high interest rates initiated by a worker who needs cash immediately
C) a loan given without review of the borrower's credit report or credit score
D) a type of loan where the title to an asset is used as collateral
A) a loan from one entity electronically matched to another entity without a financial institution in the middle
Which choice is the best source of student loans and why?
A) US Dept of Education loan because they are federally sponsored and don't require a cosigner and have flexible repayment and forgiveness terms
B) Private Lenders because they require higher credit requirements and collateral and their rates are lower
C) a parent or guardian's credit cards
D) scholarships and grants
The best answer to this question is:
D) scholarships and grants
Scholarships and grants are considered the best source of funding for education because they do not need to be repaid, making them a form of free money for students. They can significantly reduce the overall cost of education and do not accrue interest like loans do.
However, if the question is strictly about loans and not about all types of financial aid, then the next best answer would be:
A) US Dept of Education loan because they are federally sponsored and don't require a cosigner and have flexible repayment and forgiveness terms
Federal student loans often offer lower interest rates compared to private loans, do not require a credit check or a cosigner for most types, and come with benefits such as income-driven repayment plans, deferment, forbearance options, and potentially even loan forgiveness programs for those who qualify.
What kind of loan is a federal student loan?
A) a revolving line of credit
B) a secured personal loan
C) an unsecured collateral loan
D) an unsecured installment loan
D) an unsecured installment loan
Federal student loans are a form of unsecured installment loan, which means borrowers are not required to put down any collateral to secure the loan, and they pay back the loan in fixed payments or installments over a scheduled period of time.
How does decreasing your credit card balance affect your income statement?
A) it increases your monthly expenses, increasing the amount you spend each month
B) It increases your monthly expenses, giving you more money to spend on other things.
C) It decreases your monthly expense, increasing the amount you spend each month.
D) It decreases your monthly expenses, giving you more money to spend on other things.
D) It decreases your monthly expenses, giving you more money to spend on other things.
Decreasing your credit card balance reduces the amount you owe, which in turn can lower your monthly payments if you are paying interest on a carried balance. This lowers your monthly expenses, freeing up more of your income to allocate to other expenditures or savings. If you pay off your balance in full, you eliminate any interest charges, which results in even more significant savings and an increased cash flow.
What should you do before you complete your net worth statement?
A) Redistribute the investments in your retirement account.
B) Decide what, if anything, you are going to your children in your will.
C) Complete your income statement
D) Determine or estimate the current value of everything you own.