Quiz 3.1 - 3.4

Question 1

Credit

Answer 1

Purchasing something that you don’t pay for immediately

Question 2

Creditor

Answer 2

An organization or person that extends credit to a consumer

Question 3

Debtor

Answer 3

A person who uses credit

Question 4

Assets

Answer 4

Everything you own (home, car, bank account, etc.)

Question 5

Earning Power

Answer 5

Your ability to earn money now and in the future (want to have enough income to repay debt)

Question 6

Credit Reporting Agency

Answer 6

Compiles records on all users of credit. Gives to creditors before debtors can use credit.

Question 7

Credit Rating

Answer 7

Report card where creditor rates how well you met your financial obligations to a credit reporting agency

Question 8

Fico Score

Answer 8

credit score ranging from 300-850, summarizing the probability that debtors will repay their debts. 850 is good

Question 9

Installment Plan

Answer 9

Paying for merch or service over a period of time

Question 10

Down Payment

Answer 10

Initial amount paid on an installment plan at time of purchase

Question 11

Deferred Payment Plans

Answer 11

Payment over a period of time but interest is not charged if everything is paid on time

Question 12

Layaway Plans

Answer 12

Customer doesn’t receive the product until it is fully paid for

Question 13

Promissory Note

Answer 13

Document that must be signed that details the conditions of a loan. Signing it is promising to pay back your loan

Question 14

Principal

Answer 14

The initial loan amount that you borrow is the principle

Question 15

APR

Answer 15

Annual Percentage Rate - interest rate you pay per year

Question 16

Cosigner

Answer 16

Person who will pay back the loan if the borrower can’t

Question 17

Life Insurance

Answer 17

Covers the borrower’s loans in the event that the borrower dies

Question 18

Prepayment Privilege

Answer 18

allows borrowers to pay before the due date to reduce interest

Question 19

Prepayment Penalty

Answer 19

borrowers must pay a fee if they want to pay back the entire loan before the due date

Question 20

Wage Assignment

Answer 20

Voluntary deduction from employees paycheck used to pay off loans

Question 21

Wage Garnishment

Answer 21

involuntary form of wage assignment, usually ordered by the court

Question 22

Balloon Payment

Answer 22

Last monthly loan on some payments can be much higher than the rest

Question 23

Lending Institution

Answer 23

Organization that extends loans

Question 24

Collateral

Answer 24

Customer who needs money leaves a small personal belonging while they are paying off the loan

Question 25

Payday Loan

Answer 25

Loan taken for a short amount of time that borrower agrees to pay back once they receive their paycheck

Question 26

Career Schools

Answer 26

Institutions that provide students with skills for specific jobs

Question 27

Free Application for Federal Student Aid (FAFSA)

Answer 27

Will faciliate loans for students

Question 28

Student Aid Report

Answer 28

Will indicate expected family contribution as well as other information about loans that you could take out

Question 29

Federal Loan

Answer 29

Funded by the Federal Government

Question 30

Private Loan

Answer 30

issued by a bank, credit union, school, or even state agency.

Question 31

Federal Direct Subsidized Loan (Stafford)

Answer 31

Need based. Students can defer interest payments for a period of time. Students receive a six month grace period after school before they need to begin paying on the loan. Government pays the loans while the student is in school and during the six month period

Question 32

Federal Direct Unsubsidized Loan

Answer 32

Non-Need based and interest on the loan is expected to be paid from the time it is taken out. No payment required while you’re in school or in the six months after graduation

Question 33

Federal PLUS Loan (Parent Loan for Undergraduate Students)

Answer 33

allows parents (or grad students) to borrow money for college expenses

Question 34

Federal Perkins Loan

Answer 34

loans for students with high financial need

Question 35

Default

Answer 35

When a borrower fails to pay a loan on the schedule that was set for them