Tips and Tools For Financial Success - Newton Free Library

Answers for Borrowing Basics Quiz
1. Correct Answer: d. All of the above
Many places offer car loans. A savvy consumer compares the terms and rates to find the best
option.
2. Correct Answer: d. All of the above
A car dealer may require any or all of the conditions listed. First time purchasers without credit
history may need a co-signer.
3. Correct Answer: b. Equity = the current market value of the home minus the outstanding debt
Debt is subtracted from the value of the home to determine equity.
4. Correct Answer: d. Capacity, Capital, Character, Collateral
Your capacity is your ability to repay a loan (income). Capital is the value of your
investment (down payment). Character means that you paid your debts in the past (credit
history). Collateral is an asset that you pledge to the lender to secure your loan (property).
5. Correct Answer: b. Food and Beverages
Answers a, c and d typically are higher-priced durable goods which could serve as collateral
on an installment loan.
6. Correct Answer: c. Collateral
Collateral might be a car or home.
7. Correct Answer: b. A fixed-rate installment loan
Equal payments are typical of a fixed rate loan.
8. Correct Answer: d. All of the above
All the above statements refer to rent-to-own.
9. Correct Answer: d. All of the above
Many useful publications can be found on the FTC website at https://bulkorder.ftc.gov/
10. Correct Answer: b. Payments are lower
Payments are typically higher for car loans and lower for car leases.
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