3. Banking and Credit
Managing Debt — Quiz
Test your understanding of managing debt with 5 practice questions.
Practice Questions
Question 1
An individual has a gross monthly income of \5,000 and total monthly debt payments of \1,200. They consolidate these debts into a single loan with a monthly payment of \$950. What is the change in their debt-to-income ratio?
Question 2
Consider a \$1,200 personal loan at 12\\% APR amortized over 12 months. What is the monthly payment and the amount of the first payment applied to principal?
Question 3
A borrower takes a \1,000 personal loan with a 12\\% APR and a \$50 origination fee deducted upfront. What is the approximate effective APR for a one-year term?
Question 4
Which debt management strategy involves entering a program with a credit counseling agency to negotiate lower interest rates and consolidate payments via a single monthly installment?
Question 5
Which practice most effectively helps consumers avoid predatory lending when selecting a loan product?