Question 1

Commercial banks are generally more selective in granting loans than finance companies.

Accepted Answer

A) True 
 B)False

Question 2

Both single-payment and installment loans can have variable interest rates.

Accepted Answer

A) True 
 B)False

Question 3

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 $5,000 at 9%.You may choose a 24 or 36 month repayment plan.The total finance cost will be higher with the [24 | 36] month plan.

Accepted Answer

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

Question 4

Consumer loans are most commonly used to obtain durable goods.

Accepted Answer

A) True 
 B)False

Question 5

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.

Accepted Answer

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

Question 6

Commercial banks generally charge lower interest rates than other lending institutions because

Accepted Answer

A)  they make shorter term loans. 
B)  they usually take only the best credit risks. 
C)  depositors require lower rates. 
D)  they get their funds in the open credit market. 
E)  they make secured loans only. 
A)  they make shorter term loans. 
B)  they usually take only the best credit risks. 
C)  depositors require lower rates. 
D)  they get their funds in the open credit market. 
E)  they make secured loans only.

Question 7

Generally speaking,variable rate loans are desirable if interest rates are expected to increase over the course of the loan.

Accepted Answer

A) True 
 B)False

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.
-An [add-on | acceleration] clause allows the lender to demand repayment of the entire debt if the borrower defaults on his payments.

Accepted Answer

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

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Consolidation loans are used to purchase new furniture and appliances when many items are needed at the same time.

Accepted Answer

A) True 
 B)False

Question 13

Home equity loans are similar to other installment loans except

Accepted Answer

A)  interest rates are generally higher. 
B)  the interest paid is generally tax deductible. 
C)  no home equity is required. 
D)  they are typically unsecured debts. 
E)  a and c 
A)  interest rates are generally higher. 
B)  the interest paid is generally tax deductible. 
C)  no home equity is required. 
D)  they are typically unsecured debts. 
E)  a and c

Question 14

About one in four student loans are past due.

Accepted Answer

A) True 
 B)False

Question 15

A loan from the cash value of your life insurance policy would be characterized by

Accepted Answer

A)  increased death benefits to beneficiaries. 
B)  increased premiums. 
C)  unchanged death benefits available to beneficiaries. 
D)  no specific repayment date. 
E)  annual percentage rates higher than other sources. 
A)  increased death benefits to beneficiaries. 
B)  increased premiums. 
C)  unchanged death benefits available to beneficiaries. 
D)  no specific repayment date. 
E)  annual percentage rates higher than other sources.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

If a 12-month installment loan is prepaid at the end of 6 months,less than one half of the interest would be saved.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

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

Question 19

Consumers whose debt burden has become very heavy might apply for a(n)

Accepted Answer

A)  personal loan. 
B)  single payment loan. 
C)  buy-down loan. 
D)  consolidation loan. 
E)  interim financing. 
A)  personal loan. 
B)  single payment loan. 
C)  buy-down loan. 
D)  consolidation loan. 
E)  interim financing.

Question 20

Installment loans are typically repaid in one payment.

Accepted Answer

A) True 
 B)False

Commercial banks are generally more selective in granting loans than finance companies.

Both single-payment and installment loans can have variable interest rates.

Consumer loans are most commonly used to obtain durable goods.

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.

Commercial banks generally charge lower interest rates than other lending institutions because

Generally speaking,variable rate loans are desirable if interest rates are expected to increase over the course of the loan.

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

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.

Consolidation loans are used to purchase new furniture and appliances when many items are needed at the same time.

Home equity loans are similar to other installment loans except

About one in four student loans are past due.

A loan from the cash value of your life insurance policy would be characterized by

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

If a 12-month installment loan is prepaid at the end of 6 months,less than one half of the interest would be saved.

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

Consumers whose debt burden has become very heavy might apply for a(n)

Installment loans are typically repaid in one payment.

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

Commercial banks are generally more selective in granting loans than finance companies.

Both single-payment and installment loans can have variable interest rates.

Consumer loans are most commonly used to obtain durable goods.

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.

Commercial banks generally charge lower interest rates than other lending institutions because

Generally speaking,variable rate loans are desirable if interest rates are expected to increase over the course of the loan.

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

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.

Consolidation loans are used to purchase new furniture and appliances when many items are needed at the same time.

Home equity loans are similar to other installment loans except

About one in four student loans are past due.

A loan from the cash value of your life insurance policy would be characterized by

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

If a 12-month installment loan is prepaid at the end of 6 months,less than one half of the interest would be saved.

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

Consumers whose debt burden has become very heavy might apply for a(n)

Installment loans are typically repaid in one payment.

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