Dave Ramsey chapter 4 pre-test

Something that credit card commercials don't show you is...

People making payments for months or years on those credit card purchases

When a homeowner takes out a home equity line of credit (HELOC), that loan can only be used for home repairs and renovations

False

Banks and lenders use credit scores to determine...

The likelihood that someone is able to repay debt

Making purchases with a credit card means that you're borrowing money with interest, and___pay much higher interest rates

Young people

When you finance a new car, you will end up paying more than the sticker price

True

While it may not always appear so, the majority of Americans live paycheck to paycheck

True

Your greatest tool to building wealth is___

Your income

___requrie the borrower to put up collateral for the loan

Secured loans

Which of the following is part of the formula that determines a person's FICO score?

Their history of payments made to lenders

There are certain things, like renting a car or booking a hotel room, that you cannot do without having a credit card

False

Leasing a car is a method of financing where someone___

Makes monthly payments on but does not own the vehicle

What is the Second Foundation?

Get out and stay out of debt

Credit card companies make the most profit from____

Charging interest to customers who only pay part of their monthly debt

Which is an example of an appreciating asset?

A home

Once you turn 18, you should regularly check your credit report...

For errors or signs of identity fraud

Credit cards that offer flashy rewards like airline miles often...

Charge a high annual fee

Car lease agreements come with a stipulation that you must pay a penalty if you___

Go over the pre-established mileage cap

The debt snowball method involves...

Paying off debts from smallest to largest

Loans that directly help you advance in life, such as student loans, are acceptable debts

False

Predatory lenders get their negative reputation from...

Charging high fees for loans and targeting desperate people

A credit score is an indicator of how early someone pays off their debt, not how well they handle money

True

When you buy with credit, you typically spend more than you would with cash or a debit card

True

The smartest way to buy a car is to____

Pay for it in cash

What is the best way to avoid falling into debt?

Only buy things that you can purchase with cash

Credit isn't a wealth-building tool, it's a business that makes money for...

Credit card companies, banks, and lenders

A car is a dedicating assets

True

When looking over your credit report, it's important to make sure...

No lines of credit have been opened under your name without your knowledge

Credit card companies charge stores a 2-3% fee for every purchase made with credit cards. This is called a(n)...

Merchant fee

The___is the total amount of the car loan, plus taxes and fees

Principal

How you spend and give your money...

Is a reflection of your personal values