Exam 7: Student and Consumer Loans: the Role of Planned Borrowing

Steven is beginning a new job but has not yet been paid.He needs $400 to pay his rent this month.Steven is going to borrow the money through a Payday Loan establishment.They are charging him an $80 fee to borrow the money for 10 days until he receives his first paycheck.What is the actual interest rate that Steven is being charged?

Direct subsidized loans are made only to undergraduates who demonstrate financial need.

You just received a loan from your banker to buy seed and plant your alfalfa field.The loan is a discount loan and is for $5,000 for 1 year and the quoted rate was 10%.What is your APR?

Not having health insurance could lead to filing for bankruptcy if one has incurred large medical expenses and is unable to pay these bills off in a timely manner.

What can a couple seeking to get out of debt do?

Veronica was offered a loan using the discount method of calculation by her bank.She will borrow $10,000 for one year at an APR of 11%.How large will the check be that Veronica receives? How much must she repay?

What is the loan clause stating that if you default on a secured loan,the lender can repossess whatever is secured,as well as bill you for the difference if that repossession does not cover what you owe?

The ________ is the true simple interest rate paid over the life of a loan and provides a reasonable approximation for the true cost of borrowing.

Congratulations! You have just graduated from college and are determining what your monthly student loan payments will be.After consolidating all of your loans,you have a balance of $18,000.At 8% APR for 10 years,what will your monthly payments be?

In driving around town one day,you noticed most of the payday loan companies were located close to the college and the local military base and there were none out in the newer neighborhoods.Why do you think this is so?

A federal direct subsidized loan has tremendous advantages over other types of loans,including

According to the Keown book,a(n)________ is a loan involving a formal contract that details exactly how much you're borrowing and when and how you're going to pay the loan back.

What happens when you default on a car loan where your Title is held as collateral?

What are the opportunity costs associated with Student loans?

A 529 plan is a tax-advantaged savings plan designed to encourage parents to save for future college costs for their children.The plan comes in two forms: pre-paid tuition plans and college savings plans.

Student loans are a smart source of financing for school because you only pay part of the interest charges and the rest is subsidized by the lender.

The "Repo Man" recently repossessed your car for failure to make payments.You still owed $5,000 on the loan,but since it was always broken,you were glad to get rid of it anyway.The bank sold the car at a wholesale auction for $3,000.The bank also paid the "Repo Man" $200 and paid attorney fees of $300.Based on the deficiency payments clause in your loan,what are you liable for?

The simple interest method is the most common method of calculating payments on an installment loan.

Student loans are loans with federally subsidized interest rates given,based on financial need,to students making satisfactory progress in their degree programs.

A loan that is paid back in a single lump sum payment at the due date of the loan is commonly called a(n)