Loans Personal Loans 3

Question 1

What document do lenders most commonly require to verify a personal loan applicant's income?

Accepted Answer

Recent pay stubs or tax returns

Answer

Birth certificate

Answer

Vehicle title

Answer

Utility bills only

Question 2

A co-signer on a personal loan is responsible for:

Accepted Answer

Repaying the loan if the primary borrower defaults

Answer

Only paying if the primary borrower misses three payments

Answer

Nothing unless the lender requests it in writing

Answer

Half of every payment from day one

Question 3

Which law prohibits lenders from discriminating against loan applicants based on race, color, religion, national origin, sex, marital status, or age?

Accepted Answer

Equal Credit Opportunity Act (ECOA)

Answer

Truth in Lending Act (TILA)

Answer

Fair Credit Reporting Act (FCRA)

Answer

Community Reinvestment Act (CRA)

Question 4

What is the purpose of a loan amortization schedule?

Accepted Answer

It lists each payment's breakdown of principal and interest over the loan term

Answer

It shows a lender's profit margin

Answer

It tracks a borrower's credit score monthly

Answer

It outlines prepayment penalties only

Question 5

If a personal loan has a fixed interest rate, what does that mean for the borrower?

Accepted Answer

The monthly payment amount stays the same throughout the loan term

Answer

The rate changes based on the prime rate

Answer

The rate is fixed only for the first year

Answer

The borrower can renegotiate the rate annually

Question 6

Which credit bureau score model is most commonly used by US lenders when evaluating personal loan applications?

Accepted Answer

FICO Score

Answer

VantageScore 1.0

Answer

TransUnion TrueRisk

Answer

Equifax RiskScore