NGPF - Types of Credit Exam Questions with Correct Answers Latest Update 2025-2026
Credit - Answers Any arrangement where you get "stuff" (money, goods, services), and agree to
pay for it in the future
Loan - Answers An agreement where you are credited with a fixed amount (usually of money)
for a fixed period of time, usually with interest
Interest Rate - Answers The percentage charged for the privilege of borrowing money
Principal - Answers The amount you borrow
Term - Answers The amount of time you have to repay your principal
Collateral - Answers Something valuable that the lender can take as payment if you can't pay
back your loan (like a house or car)
Co-signer - Answers Someone who legally agrees to take responsibility for a person's debt if
they cannot repay it
Secured debt - Answers Debt tied to a specific tangible asset that can be used as collateral and
reposed if payments are no tmade
Unsecured debt - Answers Debt NOT tied to a specific asset or that cannot be repossessed if
payments are not made
Variable-rate loan - Answers Interest rate can change, based on prime rate or index rate, over
the course of the loan
Fixed-rate loan - Answers Interest rate is determined before loan is granted and remains
constant as long as ontime payments are being made
Amortization - Answers The paying off of debt with a fixed repayment schedule in regular
installments over a period of time
Debit Card - Answers A payment card that deducts money directly from a consumer's checking
account to pay for a purchase.
Unlike credit cards, they do not allow the user to go into debt, except perhaps for small negative
balances that might be incurred if the account holder has signed up for overdraft coverage.
Credit Card - Answers A card issued by a financial company giving the holder an option to
borrow funds. They charge interest and are primarily used for short-term financing. Interest
usually begins one month after a purchase is made and borrowing limits are pre-set according
to the individual's credit rating.
Schumer Box - Answers A table that appears in credit card agreements showing basic
Credit - Answers Any arrangement where you get "stuff" (money, goods, services), and agree to
pay for it in the future
Loan - Answers An agreement where you are credited with a fixed amount (usually of money)
for a fixed period of time, usually with interest
Interest Rate - Answers The percentage charged for the privilege of borrowing money
Principal - Answers The amount you borrow
Term - Answers The amount of time you have to repay your principal
Collateral - Answers Something valuable that the lender can take as payment if you can't pay
back your loan (like a house or car)
Co-signer - Answers Someone who legally agrees to take responsibility for a person's debt if
they cannot repay it
Secured debt - Answers Debt tied to a specific tangible asset that can be used as collateral and
reposed if payments are no tmade
Unsecured debt - Answers Debt NOT tied to a specific asset or that cannot be repossessed if
payments are not made
Variable-rate loan - Answers Interest rate can change, based on prime rate or index rate, over
the course of the loan
Fixed-rate loan - Answers Interest rate is determined before loan is granted and remains
constant as long as ontime payments are being made
Amortization - Answers The paying off of debt with a fixed repayment schedule in regular
installments over a period of time
Debit Card - Answers A payment card that deducts money directly from a consumer's checking
account to pay for a purchase.
Unlike credit cards, they do not allow the user to go into debt, except perhaps for small negative
balances that might be incurred if the account holder has signed up for overdraft coverage.
Credit Card - Answers A card issued by a financial company giving the holder an option to
borrow funds. They charge interest and are primarily used for short-term financing. Interest
usually begins one month after a purchase is made and borrowing limits are pre-set according
to the individual's credit rating.
Schumer Box - Answers A table that appears in credit card agreements showing basic
