Personal Finance (For 10/28 Quiz)

Question 1

Deferment

Answer 1

A type of payment where you purchase something and
pay for it later.

Question 2

Forbearance

Answer 2

A type of loan for a temporary suspension of principal payments or to reduce your monthly payment amount for up to 12 months.
- Happens if you do NOT qualify for deferment.

Question 3

Grace Period

Answer 3

A period of time after a deadline where financial obligation (e.g.: late fee or payment) may be met without penalty or cancellation.

Question 4

Grants

Answer 4

Financial aid that is given based on financial need.
- does NOT need to be repaid

Question 5

Scholarships

Answer 5

Financial aid that is given based on merit.
- does NOT need to be repaid

Question 6

Student Loans

Answer 6

Loans that are given in order to pay for education expenses
and must be paid back at a later time.

Question 7

Subsidized Loans

Answer 7

Loans that do not accumulate interest while a student is enrolled in
school.
- The interest is paid by the government.

Question 8

Unsubsidized Loans

Answer 8

Loans that accumulate interest while a student is enrolled in
school. The interest is NOT paid by the government.

Question 9

Interest Rates

Answer 9

The percentage amount that a lender charges a borrower each year in order to borrow money.
- Price you pay for borrowing money

Question 10

Interest

Answer 10

The price you pay to borrow money/the cost you charge to lend money.

Question 11

Private Loan

Answer 11

Loans that are offered by banks and credit unions—NOT the government.
- Private student loans can help you pay for college after you’ve explored scholarships and grants.
- Private loans are credit-based.

Question 12

Financial Aid

Answer 12

Money that helps pay for education.
- NOTE: Grants, work-study, loans, and scholarships help make educational opportunities (college, career school, etc.) more affordable.

Question 13

Income-based Repayment Plan (IBR)

Answer 13

A federal student loan repayment program that adjusts the amount you owe every month based on your income and family size.

Question 14

Graduated Repayment Plan

Answer 14

A federal student loan repayment program for those who expect their incomes to rise over time and want to start by repaying with lower payments.
- Payments start off low and increase every 2 years or so.

Question 15

Fixed Repayment Plan

Answer 15

A federal student loan repayment program where you pay a fixed amount every month you’re in school and during your separation/grace period.

Question 16

Fixed Expense

Answer 16

Something in your budget that costs the same amount each month.

Examples: Mortgages, rent, property taxes, car payments, real estate taxes, etc.

Question 17

Variable Expense

Answer 17

Something in your budget that will most likely cost a different amount each month or from previous payments.

Examples: Gas, groceries, home maintenance & repairs, hobbies and recreation, parking fees, clothing, etc.

Question 18

Finance Charge

Answer 18

The cost of borrowing money
- Higher finance charge = higher risk and costs

Applicable to: mortgages, credit cards, interest rates, etc.

Question 19

Down Payment

Answer 19

A sum of money the buyer pays the seller at the start of a large transaction.

Question 20

Closing Costs

Answer 20

Costs paid by the borrower/buyer/seller in addition to the purchase price of a home; fees to help close a transaction.
- Can include origination fees, discount points, credit reports, etc.

Question 21

Mortgage

Answer 21

A home loan used to purchase and/or maintain a home.

Question 22

Collateral

Answer 22

Money/property that guarantees the repayment of loans.

Examples: bank savings deposits, investment accounts, etc.

Question 23

Home Repairs and Maintenance

Answer 23

The cost of maintaining your home.
- Will depend on your home’s condition, household size, type of usage, etc.

Question 24

Property Taxes

Answer 24

Taxes that are typically paid at least once a year to 1+ govt. authorities
- Amount can depend on your property’s market value and location.

Question 25

Insurance

Answer 25

A contract where an insurer compensates and reimburses an individual against financial losses.

Question 26

Home Warranty Protection

Answer 26

A type of insurance homeowners use to cover home repairs and maintenance (e.g.: electricity, heating systems, plumbing, etc.)

Question 27

Good Debt

Answer 27

Debt that helps increase your net worth or income, improve your lifestyle, and/or give you good returns from investments.

Question 28

Bad Debt

Answer 28

Debt that does NOT help increase your net worth or income, improve your lifestyle, and/or give you good returns from investments.