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NGPF Types of Credit Answers – Semester Course Topics Covered
Below, we will be covering all quiz answer keys for the topic NGPF Types of Credit:
Ans: Any arrangement where you get “stuff” (money, goods, services), and agree to pay for it in the future.
Ans: An agreement where you are credited with a fixed amount (usually of money) for a fixed period of time, usually with interest.
Q. Interest Rate
Ans: The percentage charged for the privilege of borrowing money.
Ans: The amount you borrow.
Ans: The amount of time you have to repay your principal.
Ans: Something valuable that the lender can take as payment if you can’t pay back your loan (like a house or car).
Ans: Someone who legally agrees to take responsibility for a person’s debt if they cannot repay it.
Q. Secured debt
Ans: Debt is tied to a specific tangible asset that can be used as collateral and reposed if payments are not made.
Q. Unsecured debt
Ans: Debit NOT tied to a specific asset or that cannot be repossessed if payments are not made.
Q. Variable-rate loan
Ans: The interest rate can change, based on the prime rate or index rate, over the course of the loan.
Q. Fixed-rate loan
Ans: For this type of loan, the interest rate is determined before a loan is granted and remains constant as long as on-time payments are being made.
Ans: The paying off of debt with a fixed repayment schedule in regular installments over a period of time.
Q. Debit Card
Ans: A payment card that deducts money directly from a consumer’s checking account to pay for a purchase. Unlike credit cards, they do not allow the user to go into debt, except perhaps for small negative balances that might be incurred if the account holder has signed up for overdraft coverage.
Q. Credit Card
Ans: A card issued by a financial company gives the holder an option to borrow funds. They charge interest and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual’s credit rating.
Q. Schumer Box
Ans: A table that appears in credit card agreements shows basic information about the card’s rates and fees.
Q. Annual Percentage Rate (APR)
Ans: The rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.
Q. Grace Period
Ans: The number of days between a consumer’s credit card statement date and payment due date when interest does not accrue. It is a window of time during which a consumer owes money to a credit card company for new purchases made during the last billing cycle but isn’t being charged interest.
Q. Minimum Payment
Ans: The smallest amount of a credit card bill that a credit card holder must pay each billing cycle.
Q. Penalty Annual Purchase Rate (APR)
Ans: It is a higher interest rate that can be triggered by the slightest infraction such as just one payment that is received a day late.
Q. Balance Transfer
Ans: Moving outstanding balances from one credit card to a new credit card, used by consumers who want to move their debt to a credit card with a lower interest rate, fewer penalties, or other benefits, such as reward points or travel miles.
Q. Cash Advance
Ans: A service provided by many credit card issuers allows cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank or other financial agency. They typically carry a high-interest rate – even higher than credit card itself – and the interest begins to accrue immediately.
Q. Cash Back
Ans: A cardholder benefit is offered by some credit card companies that pay the cardholder a small percentage of their net expenditures (purchases fewer refunds).
Q. Joint Account
Ans: A bank or brokerage account is shared equally between two or more individuals. This type of account typically allows anyone named on the account to access funds within it.
Q. Authorized User
Ans: A person who has permission to use and/or carry another person’s credit card, but isn’t legally responsible for paying the bill.
Q. Secured Credit Card
Ans: A type of credit card that is backed by a savings account is used as collateral on the credit available with the card. Money is deposited and held in the account backing the card.
Q. Down Payment
Ans: A type of payment made in cash during the onset of the purchase of an expensive good/service. The payment typically represents only a percentage of the full purchase price.
Q. Annual Fee
Ans: A yearly fee that may be charged for having a credit card.
Q. Credit Limit
Ans: The maximum amount that you may charge on your credit account.
Q. Credit Card Agreement
Ans: A contract that outlines the terms and conditions for using your credit card.
Q. Late Payment Fee
Ans: Fee charged when a cardholder does not make the minimum monthly payment by the due date.
Q. Credit Card Statement
Ans: A detailed list of transactions, fees, payments, and balance figures for a credit card.
Q. Introductory APR
Ans: The typically low rate charged during the beginning period after a credit account is opened, after which the regular, typically higher, APR will apply.
NGPF Auto Loans Answer Key
Read the below title auto loan and answer the questions which have been done below:
Q. What kind of car is Carl offering as collateral in exchange for his auto title loan?
Ans: 2003 Kia Sorento
Q. What is the amount financed to Carl Stoover for this title loan?
Q. What kind of auto title loan did Carl agree to?
Ans: 18-month installment plan
Q. According to this contract’s schedule, when will Carl pay off his auto title loan?
Ans: July 10, 2018
Q. How are Carl’s monthly and annual interest rate charges related?
Ans: The APR of 144% is distributed over 18 months (8% per month).
Q. What does the $1,482.87 finance charge represent?
Ans: The total payment for the loan
Q. How much does Carl owe on each repayment date?
Q. The first payment is due _________ after this agreement was made.
Ans: 1 month
Q. What will happen if Carl is 20 days late on a payment for his monthly loan?
Ans: He would have to pay $6.90 (5% of $137.94), plus the minimum $15 charge’
Q. If Carl defaults on the loan, what could happen?
Ans: The car may be repossessed and become the property of the lender.
NGPF Calculate Using a Mortgage Calculator Answer Key
Read: TREMAINEWants a one-bedroom townhouse in a trendy new development downtown; the average cost is $145,000. Later, he is preapproved for a 4.38% interest rate on a 30-year fixed mortgage. He Has saved $15,000 for a down payment
Q. What will Tremaine’s monthly payment be?
Q. How much total interest will he pay over the course of the mortgage? (Hint: Click on “Amortization Schedule”)
Q. If Tremaine waited until he had $30,000 saved for a down payment
A. What will his monthly payment be?… Ans: $752
B. How much total interest will he pay over the course of the mortgage?… Ans: $92,500
C. How much money did he save by paying an extra $15,000 upfront?… Ans: $11,460
Read: CARLIN has been renting a two-bedroom apartment with her husband and 3 kids; wants to move into a three-bedroom home instead. She took her five years, but she has saved $20,000 for a down payment. Homes in her small town are typically selling for $75,000 to $95,000. Later, she is preapproved for a 3.89% interest rate on a 30-year fixed mortgage. She needs her monthly payment to be less than $400
Q. Rounded to the nearest $500, what’s the most expensive house Carlin could buy?
Q. How much total interest will she pay over the course of the mortgage for this house?
Q. What month and year does Carlin pay off her house?
Ans: March 20, 2051
Q. If Carlin could add just $50 to each monthly payment, how much money would she save on interest?
Q. What month and year does Carlin pay off her house if she makes the higher monthly payment?
Ans: JULY 2044
Q. What are some strategies Carlin could use to make sure she has an extra $50/month for her mortgage?
Ans: Strict budget and spend less on things she wants.
Q. If Carlin can afford $450 per month, she could have just bought a more expensive house. Do you think she should pay off an expensive house in 30 years? Or, should she pay off a cheaper house in less time with less interest? Explain why you feel that way.
Ans: If she can afford that amount, she should pay off an expensive house to ensure its durability, to have a big house or good measurement and design she wants, and the increased value of the house over time. However, it should be paid off in less time so that she could save interest.
Read: Bryce has a high-paying job and has determined he could afford up to $2700 per month. He wants a sweet home to reward all his hard work; his dream home costs $550,000. He has been sloppy in the past with his bill pay, leading to a credit score of 670, so the best rate he can get is 4.26% for 30 years fixed. He is also willing to contribute $75,000 to his down payment.
Q. How much, per month, is Bryce short on the mortgage payments for his dream home?
Q. How much would Bryce’s down payment need to be if he wanted to get his monthly payments down to $2,500 or slightly under?
Q. Using this strategy, how much total interest would he pay over the course of the loan?
Q. If Bryce could raise his credit score to 700 and keep the $75,000 down payment, could he afford his dream house?
Q. Using this strategy, how much total interest would he pay over the course of the loan?
Q. What do you think Bryce should do?
Ans: Tough it out and do the higher down payment; find a different home and make improvements to his credit score.
>>Check Other NGPF Answers Here<<
Credit is the ability to borrow money from a lending institution, such as a bank or credit union, in order to purchase something or withdraw cash. You can also use credit to get a loan. Credit is granted based on your credit score, which is a measure of how likely you are to repay your debt.
A credit score is a number that represents your creditworthiness – or how likely you are to repay loans. This number is based on information in your credit report, but it isn’t the same thing as your credit history. Your credit history includes all of the accounts where you’ve borrowed.
A high credit score means that you will likely pay back the money you borrow within a certain amount of time and with interest. A low credit score means that it is less likely you will repay your debt, and therefore, people with good credit tend to get better deals on things like car loans and mortgages than those with bad credit do.
The lenders who give out the loans and make the credit decisions are called creditors. They can be individuals or companies.
When you get a loan or buy something on your credit card, it usually means that money has been lent to you and you agree to repay it in part or whole within a certain time period (the ‘term’). The lender can take back their money when this term ends, even if you have not repaid all of the money.
In order to get a loan or credit card, the creditor will look at your ability to repay. This is called your ‘credit worthiness’. It’s usually based on a numerical value assigned by a company to measure how likely you are to repay a debt. This number is your credit score.
The 3 major credit bureaus in the US are Equifax, Experian, & TransUnion. These companies keep track of your credit history, including all of the loans you have taken out and whether or not you have repaid them on time. They also keep track of any bankruptcies or court judgments against you.
Bad credit can be caused by a number of problems, including missing payments or defaulting on a loan, going into debt too many times, not having a big enough deposit to get a mortgage, and too much time with negative information in your file. This type of trouble often leads to high-interest rates on loans from creditors.
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