CRB Lending & Credit Products 1

Question 1

What is the primary purpose of a Home Equity Line of Credit (HELOC)?

Accepted Answer

To offer a revolving credit line secured by the borrower's home equity

Answer

A HELOC is a revolving credit line that allows homeowners to borrow against their home equity up to a set limit, draw funds as needed, and repay repeatedly during the draw period.

Question 2

Which loan type features fixed monthly payments of equal amounts that fully repay principal and interest by the end of the term?

Accepted Answer

Fully amortizing loan

Answer

A fully amortizing loan has scheduled payments that cover both interest and principal so that the loan balance reaches zero at the end of the term.

Question 3

What does the Loan-to-Value (LTV) ratio measure in mortgage lending?

Accepted Answer

The ratio of the loan amount to the appraised value of the collateral

Answer

LTV compares the mortgage loan amount to the appraised value of the property, helping lenders assess collateral risk — a higher LTV signals more lender risk.

Question 4

A retail banker is explaining auto loans to a customer. Which statement about auto loans is MOST accurate?

Accepted Answer

Auto loans are secured by the vehicle, which serves as collateral

Answer

Auto loans are secured loans in which the vehicle itself serves as collateral, allowing the lender to repossess the car if the borrower defaults.

Question 5

Which federal law requires lenders to disclose the Annual Percentage Rate (APR) and total finance charges to borrowers?

Accepted Answer

Truth in Lending Act (TILA)

Answer

TILA mandates that lenders disclose the APR, finance charges, and other loan terms so consumers can compare credit offers on an equal basis.

(CRB) Certified Retail Banker Practice Test

(CRB) Certified Retail Banker Practice Test

CRB Lending & Credit Products 1