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. -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.

When loaning money to a friend or family member,it is advisable to lend only the amount that you can afford to give away.

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 you want to calculate whether to take the rebate or the low interest rate on an auto financing deal,it would be most useful to have [time value of money tables | a financial calculator].

Bob Shockey borrowed $25,000 from his $250,000 cash value life insurance policy to send his daughter to private college.Assuming he pays interest as in accrues,if Bob dies before the debt is repaid his beneficiary will receive

To qualify for a Stafford loan,you must

Cash value loans are available from all types of life insurance policies.

Credit unions lend money to qualified people who are

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 longer the loan maturity,the [lower | higher] the total finance costs will be.

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 must be a member of a [credit union | S&L] in order to borrow money there.

____ loans do not have to be repaid until after you graduate from college.

Life insurance loans are income tax-free.

Annual percentage rate is equivalent to

Sometimes it may be better to use savings rather than borrow to make a purchase.This would be recommended when

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

Savings and loan associations dominate the consumer loan market.

The most common use of consumer loans are to purchase automobiles.

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.

A legal claim that allows creditors to liquidate loan collateral is a

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].

When the simple interest method is used to determine finance charges,the interest is calculated based on the