QUICK QUIZ ON LOANS

A QUICK QUIZ ABOUT LOANS

1. What is the prime rate today?
a) 1.75%
b) 2.00%
c) 1.60%
d) Don’t know

2. What is the maximum rate of interest that a bank can charge on a loan? 
a) On a regular loan 15%
b) The bank charge any interest rate that they want
c) The bank can charge up to 8% on a loan
d) Don’t know

3The bank earns the most on: 
a) From commission
b) Commission and interest
c) The banks do not make money on commission and interest since they are serving the public.
d) Don’t know

4. Who pays the highest interest rate on loans? 
a) Families
b) Students
c) Small businesses
d) Don’t know

5Where does one pay the highest interest rate on a loan? 
a) Loans from family and friends
b) A loan from the bank
c) A loan from other Financial Institutions (e.g. Credit card)
d) Don’t know

6. What is compound interest? 
a) It is the commission that you pay on the loan
b) It is interest on interest
c) It is a word used in chemistry
d) Don’t know

7. Credit rating – the introduction of credit rating in 2019 to obtain a  loan 
a) Is good because it increases competition in the loan market
b) It is beneficial for the individual in achieving a low-interest loan
c) If I have a bad credit rating – I can improve my score
d) All of the above

8. What is the most common mistake that people make when they take out a loan?
a) Not shopping around
b) Not checking whether the loan complies with their budget
c) Not calculating the full cost of the loan i.e. the cost of the loan and the handling fees
d) Don’t know

ANSWERS
1 = C   2 = A   3 = B   4 = A   5 = B   6 = B   7 = D   8 =  A

All correct – Well done, you are handling your family finances in a proficient way.  You most probably budget and are in control of your money.  If you have to take out a loan, you know exactly what are the terms and conditions. You also achieve your financial goals. Carry on the good work

4-7 correct answers – You are in a ‘manageable’ overdraft.  You know what needs to be done in plan a budget and out of overdraft but for some reason you do not get around to dealing with your family finances. All that is required is a little bit of time, the knowledge in order to get your finances in order. With a little help, you can reach your financial goals!

0-3 answers correct – You are moving your debt from one place to another, which only grows from month to month and you see no light at the end of the tunnel.  All you require is knowledge on how to take out a loan and where.  All that is required is a little bit of time, the knowledge in order to get your finances in order. With a little help, you will be able to reach your financial goals!