Question 1

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan, the amount to be:

Accepted Answer

A) repaid is $2,400. 
B) disbursed to the borrower is $2,400. 
C) repaid is $2,650.60. 
D) disbursed to the borrower is $2,650.60. 
E) repaid is $2,149.40. 
A) repaid is $2,400. 
B) disbursed to the borrower is $2,400. 
C) repaid is $2,650.60. 
D) disbursed to the borrower is $2,650.60. 
E) repaid is $2,149.40. A

Question 2

Which of the following statements regarding a consumer loan is true?

Accepted Answer

A) A consumer loan is used chiefly to make repeated purchases of relatively low-cost goods and services. 
B) A consumer loan results from a rather informal process and involves no negotiated contracts. 
C) A consumer loan provides credit cards and checks to the consumers. 
D) A consumer loan provides revolving credit to the consumers. 
E) A consumer loan is used to finance the purchase of very expensive items. 
A) A consumer loan is used chiefly to make repeated purchases of relatively low-cost goods and services. 
B) A consumer loan results from a rather informal process and involves no negotiated contracts. 
C) A consumer loan provides credit cards and checks to the consumers. 
D) A consumer loan provides revolving credit to the consumers. 
E) A consumer loan is used to finance the purchase of very expensive items. E

Question 3

You are borrowing $1,000 with an APR of 10% and a loan maturity of 1 year. Total interest charges will be the highest when:

Accepted Answer

A) you pay off the loan in 12 monthly installments. 
B) you pay off the loan in 10 monthly installments. 
C) you make one payment in full at the end of the year. 
D) you prepay the loan 6 months prior to the maturity of the loan. 
E) you pay off the loan within 30 days. 
A) you pay off the loan in 12 monthly installments. 
B) you pay off the loan in 10 monthly installments. 
C) you make one payment in full at the end of the year. 
D) you prepay the loan 6 months prior to the maturity of the loan. 
E) you pay off the loan within 30 days. C

Question 4

Jamie is going to buy furniture with a single-payment loan that is discounted. The loan will be for $5,000 for 2 years at 10% interest. Calculate the annual percentage rate (APR)on this loan. (Show all work.)

Accepted Answer

Finance Charge = $5,000 × 0.10 × 2 = $1,

Question 5

Most loans made by savings and loan associations are:

Accepted Answer

A) home improvement loans. 
B) auto loans. 
C) mortgage loans. 
D) education loans. 
E) consolidation loans. 
A) home improvement loans. 
B) auto loans. 
C) mortgage loans. 
D) education loans. 
E) consolidation loans.

Question 6

Most consumer loans are made at fixed rates of interest.

Accepted Answer

A) True 
 B)False

Question 7

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan, the amount to be:

Accepted Answer

A) disbursed is $1,900.80. 
B) disbursed to the borrower is $1,800. 
C) repaid is $1,699.20. 
D) repaid to the borrower is $1,800. 
E) disbursed to the borrower is $100.80. 
A) disbursed is $1,900.80. 
B) disbursed to the borrower is $1,800. 
C) repaid is $1,699.20. 
D) repaid to the borrower is $1,800. 
E) disbursed to the borrower is $100.80.

Question 8

Consumer finance companies:

Accepted Answer

A) charge rates that are regulated by the states where they do business. 
B) are cooperative financial institutions that are owned by their members. 
C) are non-profit financial institutions. 
D) accept deposits from their members and use the deposits for lending. 
E) are managed by large manufacturing companies. 
A) charge rates that are regulated by the states where they do business. 
B) are cooperative financial institutions that are owned by their members. 
C) are non-profit financial institutions. 
D) accept deposits from their members and use the deposits for lending. 
E) are managed by large manufacturing companies.

Question 9

Which of the following is a feature of a home equity loan?

Accepted Answer

A) The interest rate on a home equity loan is higher than that on other loans. 
B) The interest paid on a home equity loan is tax deductible. 
C) A home equity loan is generally the first mortgage loan. 
D) A home equity loan is a single-payment loan. 
E) A home equity loan is an unsecured loan. 
A) The interest rate on a home equity loan is higher than that on other loans. 
B) The interest paid on a home equity loan is tax deductible. 
C) A home equity loan is generally the first mortgage loan. 
D) A home equity loan is a single-payment loan. 
E) A home equity loan is an unsecured loan.

Question 10

In most cases, lenders take the physical property used as collateral from the borrower and liquidate the collateral until the loan is repaid in a lump sum.

Accepted Answer

A) True 
 B)False

Question 11

Downward Motors has offered Vicki either a $2,500 rebate or a 2%, 4-year loan on the new SUV she is purchasing for $33,000 with a $3,000 down payment. Vicki has done her research and knows that she can get a 6%, 4-year loan from her credit union. Should Vicki take the rebate or the 2% loan from the dealer? (Show your keystrokes.)

Accepted Answer

@#IMG-DLM& Taking the rebate and financi

Question 12

The add-on method is less expensive than the simple interest method when the stated rates of interest are identical.

Accepted Answer

A) True 
 B)False

Question 13

The annual percentage rate (APR)on a single-payment loan of $1,000 at a simple interest rate of 12% is:

Accepted Answer

A) 10%. 
B) 12%. 
C) 15%. 
D) 18%. 
E) 24%. 
A) 10%. 
B) 12%. 
C) 15%. 
D) 18%. 
E) 24%.

Question 14

Parent Loans for Undergraduate Students (PLUS)loans are made to the parents or legal guardians rather than to the students.

Accepted Answer

A) True 
 B)False

Question 15

Jamil is purchasing a new truck for $30,000. He is making a $2,000 down payment and will be making 60 monthly payments of $541 each. What are the total finance charges on this loan?

Accepted Answer

Loan Amount = $28,000 ($30,000

Question 16

It is legal for a lender to charge a prepayment penalty.

Accepted Answer

A) True 
 B)False

Question 17

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan, the amount to be:

Accepted Answer

A) repaid is $2,200. 
B) disbursed to the borrower is $2,049.20. 
C) repaid is $2,350.80. 
D) disbursed to the borrower is $2,350.80. 
E) disbursed to the borrower is $150.80. 
A) repaid is $2,200. 
B) disbursed to the borrower is $2,049.20. 
C) repaid is $2,350.80. 
D) disbursed to the borrower is $2,350.80. 
E) disbursed to the borrower is $150.80.

Question 18

If a loan has a prepayment penalty, there will be an additional cost to repay the loan early:

Accepted Answer

A) if the loan is repaid before the first payment is due. 
B) if the lender wants to recover part of the full interest that would have been earned. 
C) if the borrower has defaulted on any monthly payment. 
D) if the loan is not repaid before the loan maturity date. 
E) if the loan is prepaid 3 months before the loan maturity. 
A) if the loan is repaid before the first payment is due. 
B) if the lender wants to recover part of the full interest that would have been earned. 
C) if the borrower has defaulted on any monthly payment. 
D) if the loan is not repaid before the loan maturity date. 
E) if the loan is prepaid 3 months before the loan maturity.

Question 19

Which of the following statements regarding single-payment loans is true?

Accepted Answer

A) They are generally unsecured and do not have any collateral. 
B) They usually mature in 1 year or less. 
C) They are usually provided by retailers. 
D) They are generally used to finance auto purchases. 
E) They are provided by sales finance companies. 
A) They are generally unsecured and do not have any collateral. 
B) They usually mature in 1 year or less. 
C) They are usually provided by retailers. 
D) They are generally used to finance auto purchases. 
E) They are provided by sales finance companies.

Question 20

Which of the following statements regarding consumer finance companies is true?

Accepted Answer

A) Consumer finance companies accept deposits and give small loans to their members. 
B) Consumer finance companies make loans of any size to low-risk borrowers. 
C) Consumer finance companies offer consumer loans at the lowest interest rates. 
D) Consumer finance companies offer consumer loans only for home mortgage lending. 
E) Consumer finance companies make secured and unsecured loans to qualified individuals. 
A) Consumer finance companies accept deposits and give small loans to their members. 
B) Consumer finance companies make loans of any size to low-risk borrowers. 
C) Consumer finance companies offer consumer loans at the lowest interest rates. 
D) Consumer finance companies offer consumer loans only for home mortgage lending. 
E) Consumer finance companies make secured and unsecured loans to qualified individuals.

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan, the amount to be:

Which of the following statements regarding a consumer loan is true?

You are borrowing $1,000 with an APR of 10% and a loan maturity of 1 year. Total interest charges will be the highest when:

Jamie is going to buy furniture with a single-payment loan that is discounted. The loan will be for $5,000 for 2 years at 10% interest. Calculate the annual percentage rate (APR)on this loan. (Show all work.)

Most loans made by savings and loan associations are:

Most consumer loans are made at fixed rates of interest.

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan, the amount to be:

Consumer finance companies:

Which of the following is a feature of a home equity loan?

In most cases, lenders take the physical property used as collateral from the borrower and liquidate the collateral until the loan is repaid in a lump sum.

The add-on method is less expensive than the simple interest method when the stated rates of interest are identical.

The annual percentage rate (APR)on a single-payment loan of $1,000 at a simple interest rate of 12% is:

Parent Loans for Undergraduate Students (PLUS)loans are made to the parents or legal guardians rather than to the students.

Jamil is purchasing a new truck for $30,000. He is making a $2,000 down payment and will be making 60 monthly payments of $541 each. What are the total finance charges on this loan?

It is legal for a lender to charge a prepayment penalty.

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan, the amount to be:

If a loan has a prepayment penalty, there will be an additional cost to repay the loan early:

Which of the following statements regarding single-payment loans is true?

Which of the following statements regarding consumer finance companies is true?

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 7: Using Consumer Loans

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan, the amount to be:

Which of the following statements regarding a consumer loan is true?

You are borrowing $1,000 with an APR of 10% and a loan maturity of 1 year. Total interest charges will be the highest when:

Jamie is going to buy furniture with a single-payment loan that is discounted. The loan will be for $5,000 for 2 years at 10% interest. Calculate the annual percentage rate (APR)on this loan. (Show all work.)

Most loans made by savings and loan associations are:

Most consumer loans are made at fixed rates of interest.

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan, the amount to be:

Consumer finance companies:

Which of the following is a feature of a home equity loan?

In most cases, lenders take the physical property used as collateral from the borrower and liquidate the collateral until the loan is repaid in a lump sum.

The add-on method is less expensive than the simple interest method when the stated rates of interest are identical.

The annual percentage rate (APR)on a single-payment loan of $1,000 at a simple interest rate of 12% is:

Parent Loans for Undergraduate Students (PLUS)loans are made to the parents or legal guardians rather than to the students.

Jamil is purchasing a new truck for $30,000. He is making a $2,000 down payment and will be making 60 monthly payments of $541 each. What are the total finance charges on this loan?

It is legal for a lender to charge a prepayment penalty.

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan, the amount to be:

If a loan has a prepayment penalty, there will be an additional cost to repay the loan early:

Which of the following statements regarding single-payment loans is true?

Which of the following statements regarding consumer finance companies is true?

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters