Loans Personal Loans 2

Question 1

What is a prepayment penalty on a personal loan?

Accepted Answer

A fee charged for paying off the loan early

Answer

A fee for making the first payment late

Answer

An extra charge added to each monthly payment

Answer

A penalty for applying with multiple lenders

Question 2

Which type of personal loan is typically used to consolidate high-interest credit card debt?

Accepted Answer

Debt consolidation loan

Answer

Auto loan

Answer

Payday loan

Answer

Title loan

Question 3

A 'hard inquiry' on a credit report occurs when:

Accepted Answer

A lender pulls credit for a formal loan application

Answer

A borrower checks their own credit score

Answer

A utility company verifies identity

Answer

A borrower requests a credit freeze

Question 4

What is the typical range of personal loan terms offered by US banks and credit unions?

Accepted Answer

6 months to 7 years

Answer

1–3 months

Answer

10–30 years

Answer

1–2 years only

Question 5

Which of the following would most likely result in a higher interest rate on a personal loan?

Accepted Answer

Low credit score and high DTI

Answer

High credit score and low DTI

Answer

Long employment history

Answer

Large existing savings balance

Question 6

Which institution is generally NOT a typical source for personal loans in the US?

Accepted Answer

The Federal Reserve

Answer

Credit unions

Answer

Online fintech lenders

Answer

Commercial banks