Loans Personal Loans

Question 1

What is the primary difference between a secured personal loan and an unsecured personal loan?

Accepted Answer

Secured loans require collateral; unsecured loans do not

Answer

Secured loans have higher interest rates

Answer

Unsecured loans have longer repayment terms

Answer

Secured loans are only for business use

Question 2

Which credit score range is generally considered 'good' and may qualify a borrower for competitive personal loan rates in the US?

Accepted Answer

670–739

Answer

580–619

Answer

620–659

Answer

500–579

Question 3

What does APR stand for in the context of personal loans?

Accepted Answer

Annual Percentage Rate

Answer

Annual Payment Rate

Answer

Adjusted Principal Rate

Answer

Authorized Premium Rate

Question 4

A personal loan origination fee is typically charged to cover which of the following?

Accepted Answer

The lender's cost of processing the loan

Answer

Late payment penalties

Answer

Insurance premiums on the loan

Answer

Early payoff penalties

Question 5

When a borrower's debt-to-income (DTI) ratio is 45%, what does that indicate?

Accepted Answer

45% of gross monthly income goes toward debt payments

Answer

45% of income goes to savings

Answer

The borrower has 45% equity in an asset

Answer

The borrower's loan-to-value ratio is 45%

Question 6

Which federal law requires lenders to disclose the APR, total finance charge, and payment schedule to personal loan applicants?

Accepted Answer

Truth in Lending Act (TILA)

Answer

Fair Credit Reporting Act (FCRA)

Answer

Equal Credit Opportunity Act (ECOA)

Answer

Fair Debt Collection Practices Act (FDCPA)