Exam 7: Using Consumer Loans

An installment purchase agreement typically includes a sales contract,a security agreement,a note,and an insurance agreement.

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. -If the proceeds from the sale of your repossessed collateral are insufficient to pay the balance due on your loan,the lender usually [can | cannot] collect the deficiency from you.

Student loan debt can be discharged by filing for bankruptcy.

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 legal method of getting an employer to pay a portion of the borrower's wages to the lender is known as wage [withholding | garnishment].

Credit unions dominate the consumer loan market.

The best loan rates for consumer loans are usually from consumer finance companies.

Because no written contract is usually required,borrowing from friends and relatives is advisable.

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

Calculate the average percentage rate (APR)for an add-on loan with 36 monthly installments.The principal is $4,000;the stated interest rate is 6%.(Show all work.)

Installment loans using the simple interest method

If your installment loan has a variable interest rate,

The student loans with the lowest rates of interest and the best loan terms are the PLUS 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. -There is a limit on the [number | dollar amount] of student loans you can have.

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 interest rates are falling,you would prefer a [fixed-rate | variable-rate] 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. -Borrowing from relatives is [highly | seldom] recommended by financial advisors.

The purchase of credit life insurance is highly recommended by most financial planning experts.

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. -Students borrowing to pay for college should base the amount borrowed on [current income | future income].

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 best loan rates for consumer loans are usually from [savings and loan associations | consumer finance companies].

When the market interest rate goes up,the rate on variable rate loans goes up.

The monthly payment on an 8%,36-month,add-on loan for $10,000 would be