Question 1

Which of the following are recommended if you loan money to a friend or relative?

Accepted Answer

A) Do it in a business-like fashion. 
B) Charge interest if the loan is not to be quickly repaid. 
C) Be sure both parties understand it is a loan, not a gift. 
D) Lend only money you can afford to give away. 
E) All of the above 
A) Do it in a business-like fashion. 
B) Charge interest if the loan is not to be quickly repaid. 
C) Be sure both parties understand it is a loan, not a gift. 
D) Lend only money you can afford to give away. 
E) All of the above

Question 2

A chattel mortgage is a legal claim that gives lenders the right to liquidate specific personal property to satisfy their claims in the event of default.

Accepted Answer

A) True 
 B)False

Question 3

The majority of consumer loans are set up with fixed interest rates.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

Finance charge = $5,000 × .10

Question 6

Credit unions offer some of the most attractive loan terms available.

Accepted Answer

A) True 
 B)False

Question 7

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-Consolidation loans are generally [inexpensive | expensive].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 8

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-There are now about [$5.3 billion | $1.2 trillion] in student loans outstanding.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 9

Purchasing credit life or disability insurance protection is usually

Accepted Answer

A) required in order to make the loan. 
B) nonnegotiable. 
C) at the lender's option. 
D) very costly. 
E) a good idea for the borrower. 
A) required in order to make the loan. 
B) nonnegotiable. 
C) at the lender's option. 
D) very costly. 
E) a good idea for the borrower.

Question 10

Student loans are made by banks and other financial institutions,but students apply for these loans through their universities.

Accepted Answer

A) True 
 B)False

Question 11

PLUS loans are made to parents or legal guardians rather than to the student.

Accepted Answer

A) True 
 B)False

Question 12

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-A [sales finance company | consumer finance company] purchases notes drawn up by sellers of big-ticket items.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 13

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-When the interest rate on savings is lower than the interest rate on a loan,it is less expensive to [borrow | use savings] to make a purchase.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 14

Installment loans are typically repaid in monthly payments.

Accepted Answer

A) True 
 B)False

Question 15

About one in three student borrowers have a past due balance.

Accepted Answer

A) True 
 B)False

Question 16

The interest rate on a loan against your life insurance policy is set at the time the policy is taken out.

Accepted Answer

A) True 
 B)False

Question 17

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-To get a government-backed student loan,one should contact his [bank | university].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 18

You want to borrow $1,000 at an interest rate of 10%.The most expensive method of calculating the dollar cost of the interest on this installment loan will be the

Accepted Answer

A) add-on method. 
B) double-declining balance method. 
C) discount method. 
D) simple interest method. 
E) past-due balance method. 
A) add-on method. 
B) double-declining balance method. 
C) discount method. 
D) simple interest method. 
E) past-due balance method.

Question 19

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-A finance company uses the discount method of calculating interest.The loan principal is $5,000,the interest rate is 10%,and repayment is expected in two years.You will receive [$5,000 | $4,000] from the lender.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 20

The most accurate method currently available for calculating the annual percentage rate (APR)on an add-on loan is the Rule of 78.

Accepted Answer

A) True 
 B)False

Which of the following are recommended if you loan money to a friend or relative?

A chattel mortgage is a legal claim that gives lenders the right to liquidate specific personal property to satisfy their claims in the event of default.

The majority of consumer loans are set up with fixed interest rates.

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

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

Credit unions offer some of the most attractive loan terms available.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Consolidation loans are generally [inexpensive | expensive].

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -There are now about [$5.3 billion | $1.2 trillion] in student loans outstanding.

Purchasing credit life or disability insurance protection is usually

Student loans are made by banks and other financial institutions,but students apply for these loans through their universities.

PLUS loans are made to parents or legal guardians rather than to the student.

Installment loans are typically repaid in monthly payments.

About one in three student borrowers have a past due balance.

The interest rate on a loan against your life insurance policy is set at the time the policy is taken out.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -To get a government-backed student loan,one should contact his [bank | university].

You want to borrow $1,000 at an interest rate of 10%.The most expensive method of calculating the dollar cost of the interest on this installment loan will be the

The most accurate method currently available for calculating the annual percentage rate (APR)on an add-on loan is the Rule of 78.

Understanding the Financial Planning 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

Planning for Retirement

Preserving Your Estate

Filters

Exam 7: Using Consumer Loans

Which of the following are recommended if you loan money to a friend or relative?

A chattel mortgage is a legal claim that gives lenders the right to liquidate specific personal property to satisfy their claims in the event of default.

The majority of consumer loans are set up with fixed interest rates.

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

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

Credit unions offer some of the most attractive loan terms available.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Consolidation loans are generally [inexpensive | expensive].

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -There are now about [$5.3 billion | $1.2 trillion] in student loans outstanding.

Purchasing credit life or disability insurance protection is usually

Student loans are made by banks and other financial institutions,but students apply for these loans through their universities.

PLUS loans are made to parents or legal guardians rather than to the student.

Installment loans are typically repaid in monthly payments.

About one in three student borrowers have a past due balance.

The interest rate on a loan against your life insurance policy is set at the time the policy is taken out.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -To get a government-backed student loan,one should contact his [bank | university].

You want to borrow $1,000 at an interest rate of 10%.The most expensive method of calculating the dollar cost of the interest on this installment loan will be the

The most accurate method currently available for calculating the annual percentage rate (APR)on an add-on loan is the Rule of 78.

Understanding the Financial Planning 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

Planning for Retirement

Preserving Your Estate

Filters