loan
Interest is calculated from principal under many loan structures. This topic is part of Personal Finance within Government & Society. This page currently draws on 10 supporting questions, with answers and bonus facts available below.
loan trivia questions
A loan is money that must generally be what?
Answer: Repaid
Bonus fact: Borrowers usually repay principal plus interest.
What is the original amount borrowed called?
Answer: Principal
Bonus fact: Interest is calculated from principal under many loan structures.
What does a lender evaluate to estimate whether a borrower will repay?
Answer: Creditworthiness
Bonus fact: Income, debt, and credit history are common factors.
A mortgage is a loan commonly used to buy what?
Answer: Real estate
Bonus fact: The property usually secures the loan.
What happens to the loan balance as principal payments are made?
Answer: It decreases
Bonus fact: Each principal payment reduces the amount owed.
A house commonly serves as collateral for what type of loan?
Answer: Mortgage
Bonus fact: The property secures the mortgage.
How does a secured loan differ from an unsecured loan?
Answer: A secured loan is backed by collateral
Bonus fact: Collateral reduces lender risk.
What is the process of gradually paying off a mortgage through scheduled payments called?
Answer: Amortization
Bonus fact: Amortization spreads repayment over the loan term.
A bond is essentially what?
Answer: A loan to an issuer
Bonus fact: Governments and companies issue bonds to borrow money.
Collateral is property pledged to secure what?
Answer: Loan
Bonus fact: The lender can have rights to the collateral if the borrower defaults.