Mastering TOEIC Reading Part 1 & 2: Practice Test on Banking and Loans

TOEIC Reading Practice Test: Banking and Loan Applications

Part 1: Incomplete Sentences

1. The bank requires applicants to provide collateral to secure the loan.
   A) security
   B) guarantee
   C) assurance
   D) collateral

2. Before approving a loan, the bank will assess the applicant’s creditworthiness.
   A) credibility
   B) creditworthiness
   C) credit score
   D) credit history

3. The interest rate on the loan may fluctuate based on market conditions.
   A) vary
   B) change
   C) fluctuate
   D) alter

4. Borrowers must repay the loan according to the agreed-upon schedule.
   A) return
   B) refund
   C) reimburse
   D) repay

5. The bank offers various loan options to suit different financial needs.
   A) choices
   B) selections
   C) alternatives
   D) options

6. A good credit score can help you negotiate better loan terms.
   A) bargain
   B) negotiate
   C) discuss
   D) argue

7. The loan agreement outlines the terms and conditions of borrowing.
   A) rules and regulations
   B) terms and conditions
   C) guidelines and policies
   D) stipulations and clauses

8. Applicants must provide proof of income when applying for a loan.
   A) income statement
   B) salary slip
   C) proof of income
   D) pay stub

9. The bank may require a co-signer for applicants with limited credit history.
   A) guarantor
   B) co-signer
   C) endorser
   D) backer

10. Failure to make timely payments may result in default on the loan.
    A) delinquency
    B) tardiness
    C) default
    D) lateness

11. The bank will conduct a thorough financial assessment before approving the loan.
    A) monetary evaluation
    B) fiscal analysis
    C) economic appraisal
    D) financial assessment

12. Borrowers should carefully review the loan’s interest rate before signing the agreement.
    A) interest percentage
    B) interest rate
    C) interest charge
    D) interest fee

13. The bank may place a lien on the borrower’s property as security for the loan.
    A) claim
    B) hold
    C) lien
    D) attachment

14. Some loans offer a grace period before repayment begins.
    A) waiting time
    B) grace period
    C) interim phase
    D) deferment period

15. The loan officer will verify all the information provided in the application.
    A) check
    B) confirm
    C) validate
    D) verify

16. Borrowers may be required to pay a down payment when taking out a large loan.
    A) initial installment
    B) first payment
    C) down payment
    D) upfront fee

17. The bank will process your loan application within five business days.
    A) handle
    B) manage
    C) deal with
    D) process

18. Applicants must meet certain eligibility criteria to qualify for a loan.
    A) requirements
    B) qualifications
    C) eligibility criteria
    D) standards

19. The loan’s principal is the initial amount borrowed from the bank.
    A) capital
    B) principal
    C) base amount
    D) core sum

20. Some loans offer the option to refinance after a certain period.
    A) restructure
    B) renegotiate
    C) readjust
    D) refinance

21. The bank may require borrowers to obtain insurance for certain types of loans.
    A) coverage
    B) protection
    C) insurance
    D) assurance

22. A fixed-rate loan maintains the same interest rate throughout the repayment period.
    A) steady-rate
    B) constant-rate
    C) fixed-rate
    D) stable-rate

23. The loan’s maturity date is when the final payment is due.
    A) end date
    B) expiration date
    C) termination date
    D) maturity date

24. Borrowers should be aware of any prepayment penalties associated with early loan repayment.
    A) early settlement fees
    B) advance payment charges
    C) prepayment penalties
    D) premature closure costs

25. The bank may request a personal guarantee from business loan applicants.
    A) individual assurance
    B) personal promise
    C) private warranty
    D) personal guarantee

26. Some loans offer an introductory rate that changes after a specified period.
    A) initial rate
    B) starting rate
    C) introductory rate
    D) promotional rate

27. The bank will review the applicant’s debt-to-income ratio when assessing loan eligibility.
    A) financial burden
    B) debt-to-income ratio
    C) credit utilization
    D) financial leverage

28. Borrowers should carefully read the loan’s fine print before signing any documents.
    A) small text
    B) detailed terms
    C) fine print
    D) legal jargon

29. The bank may require a property appraisal for mortgage loan applications.
    A) home evaluation
    B) property assessment
    C) real estate valuation
    D) property appraisal

30. Some loans offer the option to make extra payments to reduce the overall interest paid.
    A) additional installments
    B) supplementary contributions
    C) extra payments
    D) bonus repayments

TOEIC Reading Practice Test on Banking and Loans

Part 2: Text Completion

Text 1:

The process of applying for a bank loan can be (31). To increase your chances of approval, it’s important to (32) your financial situation before submitting an application. First, check your credit score and (33) any errors on your credit report. Next, gather all necessary documentation, including proof of income and (34) statements. Being well-prepared can help streamline the loan application process.

31. A) complicated
    B) simple
    C) straightforward
    D) effortless

32. A) ignore
    B) overlook
    C) assess
    D) disregard

33. A) address
    B) create
    C) maintain
    D) generate

34. A) social media
    B) bank
    C) utility
    D) government

Text 2:

When applying for a business loan, it’s crucial to have a solid business plan. This document should (35) your company’s financial projections, market analysis, and growth strategy. Lenders will use this information to (36) the viability of your business and its ability to repay the loan. Additionally, be prepared to (37) how you plan to use the loan funds and how they will contribute to your business’s success. A well-crafted business plan can significantly (38) your chances of loan approval.

35. A) exclude
    B) omit
    C) include
    D) reject

36. A) disregard
    B) evaluate
    C) ignore
    D) overlook

37. A) conceal
    B) hide
    C) explain
    D) obscure

38. A) reduce
    B) diminish
    C) decrease
    D) improve

Text 3:

Different types of loans come with varying (39) and conditions. For example, secured loans typically offer lower interest rates but require (40) as a guarantee. Unsecured loans, on the other hand, may have higher interest rates but don’t require collateral. It’s important to (41) the pros and cons of each loan type before making a decision. Additionally, consider factors such as the loan term, repayment schedule, and any (42) associated with the loan.

39. A) terms
    B) words
    C) phrases
    D) expressions

40. A) promises
    B) collateral
    C) guarantees
    D) assurances

41. A) ignore
    B) overlook
    C) consider
    D) disregard

42. A) benefits
    B) advantages
    C) perks
    D) fees

Text 4:

After submitting your loan application, the bank will begin the (43) process. This typically involves reviewing your credit history, verifying your income, and assessing your ability to repay the loan. The bank may also (44) additional information or documentation during this time. It’s important to respond promptly to any requests to avoid delays in the approval process. Once the bank has (45) all necessary information, they will make a decision on your application. If approved, carefully review the loan (46) before accepting and signing any documents.

43. A) rejection
    B) approval
    C) underwriting
    D) dismissal

44. A) request
    B) deny
    C) reject
    D) refuse

45. A) discarded
    B) ignored
    C) overlooked
    D) reviewed

46. A) rejection
    B) denial
    C) terms
    D) refusal

Loan Application Process Flowchart

Answer Key

Part 1: Incomplete Sentences

1. D) collateral
2. B) creditworthiness
3. C) fluctuate
4. D) repay
5. D) options
6. B) negotiate
7. B) terms and conditions
8. C) proof of income
9. B) co-signer
10. C) default
11. D) financial assessment
12. B) interest rate
13. C) lien
14. B) grace period
15. D) verify
16. C) down payment
17. D) process
18. C) eligibility criteria
19. B) principal
20. D) refinance
21. C) insurance
22. C) fixed-rate
23. D) maturity date
24. C) prepayment penalties
25. D) personal guarantee
26. C) introductory rate
27. B) debt-to-income ratio
28. C) fine print
29. D) property appraisal
30. C) extra payments

Part 2: Text Completion

31. A) complicated
32. C) assess
33. A) address
34. B) bank
35. C) include
36. B) evaluate
37. C) explain
38. D) improve
39. A) terms
40. B) collateral
41. C) consider
42. D) fees
43. C) underwriting
44. A) request
45. D) reviewed
46. C) terms

This TOEIC Reading practice test focuses on banking and loan applications, providing a comprehensive exercise for test-takers to improve their vocabulary and comprehension skills in this specific context. The questions cover various aspects of the loan application process, financial terminology, and important considerations when applying for a bank loan. By completing this practice test, students can enhance their understanding of banking-related English and better prepare for similar topics in the actual TOEIC exam.