Loans Cheat Sheet 2026

The 30 highest-yield Loans facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What is a home equity loan's 'balloon payment'? → A large lump-sum payment due at the end of the loan term
2. What is the primary risk of refinancing federal student loans with a private lender? → The borrower loses access to federal protections like IDR plans and PSLF
3. A buyer with a 'subprime' credit score applying for an auto loan should expect: → Higher interest rates and stricter loan terms
4. When a borrower's debt-to-income (DTI) ratio is 45%, what does that indicate? → 45% of gross monthly income goes toward debt payments
5. What is a prepayment penalty on a personal loan? → A fee charged for paying off the loan early
6. A borrower takes a $400 payday loan with a $60 fee due in 14 days. What is the approximate APR? → 391%
7. Forbearance on a student loan differs from deferment primarily because: → Interest always accrues on all loan types during forbearance, even subsidized loans
8. A 'hard inquiry' on a credit report occurs when: → A lender pulls credit for a formal loan application
9. When refinancing an auto loan, what is the primary benefit a borrower typically seeks? → Obtaining a lower interest rate to reduce monthly payments or total cost
10. What is the primary difference between a secured personal loan and an unsecured personal loan? → Secured loans require collateral; unsecured loans do not
11. How much of your gross monthly income should you set aside for your mortgage and other debt obligations? → 45%
12. Being 'upside down' on an auto loan means: → The borrower owes more than the car is currently worth
13. What type of interest rate do most HELOCs carry? → Variable rate, typically tied to the prime rate
14. Which of the following is considered an alternative to payday loans for consumers needing emergency funds? → Payday Alternative Loans (PALs) offered by federal credit unions
15. Which federal agency has primary supervisory and regulatory authority over payday lenders? → The Consumer Financial Protection Bureau (CFPB)
16. Most US lenders cap the combined loan-to-value (CLTV) ratio for a HELOC or home equity loan at what maximum percentage? → 80–85%
17. What mortgage program guarantees that your interest rate and monthly mortgage payment won't change? → Fixed Rate
18. What is the purpose of a loan amortization schedule? → It lists each payment's breakdown of principal and interest over the loan term
19. Under the Military Lending Act (MLA), what is the maximum APR a lender can charge active-duty service members on payday loans? → 36%
20. What mortgage term offers customers the highest monthly payment and the lowest overall interest cost? → 10 years
21. Which federal form must students complete to apply for federal student aid, including loans? → FAFSA
22. What is the main difference between subsidized and unsubsidized federal student loans? → The government pays interest on subsidized loans while the student is in school
23. Which of the following typically results in a lower interest rate on an auto loan? → Making a larger down payment
24. What is a personal guarantee on a business loan? → A promise by the business owner to personally repay the loan if the business cannot
25. The SBA 504 loan program is specifically designed to fund: → Owner-occupied commercial real estate or major fixed assets for business expansion
26. What does APR stand for in the context of personal loans? → Annual Percentage Rate
27. What happens to a federal student loan that is more than 270 days past due? → It enters default status
28. Which law prohibits lenders from discriminating against loan applicants based on race, color, religion, national origin, sex, marital status, or age? → Equal Credit Opportunity Act (ECOA)
29. What is the typical maximum auto loan term offered by most US lenders today? → 84 months
30. Which type of student loan is based primarily on financial need as determined by the FAFSA? → Direct Subsidized Loan