Exam 7: Using Consumer Loans

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. -529 plans are best suited for a child [already in college | with several years left before going to college].

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. -Using [simple | add-on] interest would be less expensive for the borrower when determining the total to be paid to the lender.

With the discount method,the finance charges are calculated and then added to the amount borrowed.

Installment loans using the simple interest method

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. -You are borrowing $1,000,the APR is 10%,and the loan term is one year.Total interest charges will be higher if [you pay off the loan in 12 monthly installments | you make one payment in full at the end of the year].

Besides the finance charge,you should also consider ____ when you shop for a consumer loan.

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. -Loan repayment of a [Perkins | PLUS] loan would not begin until a student is out of school.

Home equity loans are similar to other installment loans except

When comparing two installment loans with the same principal and APR,the loan with the longer maturity will have the lower monthly payment and the higher total costs.

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

Earnings on 529 college savings plans can be tax free when used for qualifying college education expenses.

Variable-rate loans are desirable if interest rates are expected to fall in the future.

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. -Almost half of all consumer loans are made by [commercial banks | finance companies].

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 529 plan is a [savings | lending] plan.

When credit life or disability insurance protection is required as a condition of a loan,the cost

The cash value of a life insurance policy can be used as a source of loan collateral.

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. -?The recent average annual cost of a college education at a private college is [under $40,000 | over $45,000].

Which type of educational loan most likely carries the highest interest charges?

College costs have been escalating,but not as rapidly as the overall rate of inflation.

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. -Your budget should be considered [before | after] taking on a large consumer loan.