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Auto Loans & Mortgages

Quiz by Jennifer Whiteaker

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14 questions
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  • Q1
    What is the main difference between a fixed-rate mortgage and an adjustable-rate mortgage?
    Fixed-rate mortgages have higher interest rates initially but can decrease over time
    The interest rate remains the same throughout the life of a fixed-rate mortgage, but can change in an adjustable-rate mortgage.
    Adjustable-rate mortgages are only available for commercial properties
    Only fixed-rate mortgages allow for early repayment without penalties
    30s
  • Q2
    What is a down payment when applying for a mortgage or auto loan?
    A payment made to reduce the interest rate
    A payment made at the end of the loan term
    A payment made to extend the loan duration
    A payment made upfront towards the purchase price of a vehicle or property
    30s
  • Q3
    What does being 'underwater' on your auto loan or mortgage mean?
    You have paid off more than half of the loan's value
    You have refinanced your loan at a lower interest rate
    You have missed multiple payments on your loan
    You owe more on the loan than the asset's current market value
    30s
  • Q4
    What is private mortgage insurance (PMI) and when is it typically required?
    Insurance that guarantees a fixed interest rate throughout the loan term
    Insurance that protects the lender in case the borrower defaults on the loan with a down payment less than 20%
    Insurance that covers the entire loan amount for the borrower
    Insurance that protects the borrower in case of property damage
    30s
  • Q5
    What is the role of a co-signer in the context of obtaining an auto loan or mortgage?
    A co-signer agrees to be responsible for loan payments if the primary borrower fails to make them
    A co-signer provides the down payment for the loan
    A co-signer evaluates the asset's market value before the loan is approved
    A co-signer negotiates the interest rate on behalf of the borrower
    30s
  • Q6
    What is the purpose of a pre-approval for an auto loan or mortgage?
    To finalize the loan terms and interest rate
    To determine how much money a lender is willing to lend you based on your financial situation
    To compare different loan options from various lenders
    To pay a fee in advance to secure the loan
    30s
  • Q7
    What does 'equity' mean in the context of a mortgage?
    The fee charged for early repayment of the mortgage
    The interest rate applied to the initial loan amount
    The difference between the property's current market value and the amount owed on the mortgage
    The total amount of payments made towards the mortgage over a year
    30s
  • Q8
    What factor does NOT directly affect your monthly auto loan payments?
    The loan term
    The principal amount
    The interest rate
    The color of the car
    30s
  • Q9
    Which of the following is typically required as part of the mortgage application process?
    A college diploma
    Proof of income
    Your car's registration
    A letter of recommendation
    30s
  • Q10
    What is 'principal' in the context of a loan?
    The total amount of interest paid over the life of the loan
    A penalty fee for late payment
    The interest rate of the loan
    The original sum of money borrowed
    30s
  • Q11
    What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?
    A fixed-rate mortgage has a constant interest rate throughout the loan term, while an adjustable-rate mortgage (ARM) has a rate that can change periodically.
    An ARM always has a shorter loan term than a fixed-rate mortgage
    A fixed-rate mortgage is only available to first-time homebuyers
    A fixed-rate mortgage requires a larger down payment than an ARM
    30s
  • Q12
    Which of the following is an example of a secured loan?
    Personal loan
    Student loan
    Auto loan
    Credit card debt
    30s
  • Q13
    What factor most directly influences the interest rate of a mortgage?
    The size of the home
    The color of the house
    Credit score
    The age of the homebuyer
    30s
  • Q14
    Which of the following best defines a mortgage?
    A loan used to purchase a home, where the property serves as collateral
    A loan used exclusively for purchasing vehicles
    A long-term rental agreement
    An agreement where property is temporarily exchanged for money with no repayment necessary
    30s

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