Loans Study Guide 2026
Everything you need to pass the Loans exam in one place: the exam format, every topic to study, real practice questions with explanations, flashcards, and full-length practice tests. Free, no sign-up needed.
📋 Loans Exam Format at a Glance
📚 Loans Topics to Study (21)
✍️ Sample Loans Questions & Answers
1. What is the primary reason payday loans are disproportionately used by low-income and 'underbanked' consumers?
Underbanked consumers who lack access to traditional credit products such as credit cards or personal loans often turn to payday loans despite high costs because approval is fast and does not depend on credit scores.
2. If a personal loan has a fixed interest rate, what does that mean for the borrower?
A fixed interest rate means the rate and monthly payment remain constant for the entire loan term, making budgeting predictable.
3. What is a 'cooling-off period' in payday lending regulations?
A cooling-off period is a state-mandated waiting time that must pass before a borrower can take out another payday loan after repaying one, intended to break the cycle of repeat borrowing.
4. A co-signer on a personal loan is responsible for:
A co-signer is equally legally liable for the loan and must repay it if the primary borrower fails to do so.
5. A borrower takes a $400 payday loan with a $60 fee due in 14 days. What is the approximate APR?
The APR is calculated as (fee/principal) × (365/loan term) × 100 = ($60/$400) × (365/14) × 100 ≈ 391%, illustrating why payday loan APRs are extraordinarily high.
6. What is the primary purpose of the SBA 7(a) loan program in the United States?
The SBA 7(a) program guarantees a portion of loans made by approved lenders to small businesses that lack collateral or credit history for conventional loans.