Question 1

In most cases, lenders take the physical property used as collateral from the borrower and liquidate the collateral until the loan is repaid in a lump sum.

Accepted Answer

A) True 
 B)False  False

Question 2

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

Accepted Answer

A)  future value of the installments. 
B)  average outstanding balance. 
C)  actual balance of the loan. 
D)  present value of all finance charges. 
E)  future value of all finance charges. 
A)  future value of the installments. 
B)  average outstanding balance. 
C)  actual balance of the loan. 
D)  present value of all finance charges. 
E)  future value of all finance charges. C

Question 3

Which of the following statements regarding loan collateral is true?

Accepted Answer

A)  Loans secured by collateral always have higher finance charges than unsecured loans. 
B)  Collateral is an item of value used to secure the principal portion of a loan. 
C)  Collateral is always required by banks to lend to customers with good credit ratings. 
D)  Collateral is an item of value used to secure the interest portion of a loan. 
E)  Loans are secured by collateral that is readily marketable at a price high enough to cover the interest portion of the loan. 
A)  Loans secured by collateral always have higher finance charges than unsecured loans. 
B)  Collateral is an item of value used to secure the principal portion of a loan. 
C)  Collateral is always required by banks to lend to customers with good credit ratings. 
D)  Collateral is an item of value used to secure the interest portion of a loan. 
E)  Loans are secured by collateral that is readily marketable at a price high enough to cover the interest portion of the loan. B

Question 4

Most loans made by savings and loan associations (S&Ls) are:

Accepted Answer

A)  home improvement loans. 
B)  auto loans. 
C)  mortgage loans. 
D)  education loans. 
E)  consolidation loans. 
A)  home improvement loans. 
B)  auto loans. 
C)  mortgage loans. 
D)  education loans. 
E)  consolidation loans.

Question 5

INSTRUCTIONS: 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 majority of consumer loans are made with [ fixed | variable ] interest rates.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 6

INSTRUCTIONS: 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 Rule of 78s charges more interest in the [ early  | later ] months of the loan.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 7

You can borrow, repay, and reborrow from a home equity loan in the same way as you can from a home equity credit line.

Accepted Answer

A) True 
 B)False

Question 8

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan, the amount to be:

Accepted Answer

A)  repaid is $1,900.80. 
B)  paid to the borrower is $1,699.20. 
C)  repaid is $1,699.20. 
D)  repaid to the borrower is $1,800. 
E)  paid to the borrower is $100.80. 
A)  repaid is $1,900.80. 
B)  paid to the borrower is $1,699.20. 
C)  repaid is $1,699.20. 
D)  repaid to the borrower is $1,800. 
E)  paid to the borrower is $100.80.

Question 9

INSTRUCTIONS: 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 ] a large consumer loan is taken out.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 10

The annual percentage rate (APR) on a single-payment loan of $1,000 at a simple interest rate of 12% is:

Accepted Answer

A)  10%. 
B)  12%. 
C)  15%. 
D)  18%. 
E)  24%. 
A)  10%. 
B)  12%. 
C)  15%. 
D)  18%. 
E)  24%.

Question 11

A _____ loan is intended to help consumers who have an unhealthy credit situation caused by overusing their credit.

Accepted Answer

A)  personal 
B)  single-payment 
C)  buy-down 
D)  consolidation 
E)  standard 
A)  personal 
B)  single-payment 
C)  buy-down 
D)  consolidation 
E)  standard

Question 12

The repayment of the principal of installment loans is made in a lump sum, and the repayment period of installment loans is 6 to 12 months.

Accepted Answer

A) True 
 B)False

Question 13

If your debt safety ratio works out to 10%, you are relying too heavily on credit.

Accepted Answer

A) True 
 B)False

Question 14

INSTRUCTIONS: 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 $47,000 | over $51,000 ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 15

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

Accepted Answer

A)  repaid is $2,400. 
B)  paid to the borrower is $2,400. 
C)  repaid is $2,650.60. 
D)  paid to the borrower is $2,650.60. 
E)  repaid is $2,149.40. 
A)  repaid is $2,400. 
B)  paid to the borrower is $2,400. 
C)  repaid is $2,650.60. 
D)  paid to the borrower is $2,650.60. 
E)  repaid is $2,149.40.

Question 16

Home equity loans are similar to home equity credit lines because they are also not secured with any collateral.

Accepted Answer

A) True 
 B)False

Question 17

You should consider your _____ before you take on a large consumer loan.

Accepted Answer

A)  educational qualifications 
B)  history of auto ownership 
C)  past employment 
D)  financial plans 
E)  career plans 
A)  educational qualifications 
B)  history of auto ownership 
C)  past employment 
D)  financial plans 
E)  career plans

Question 18

Purchasing credit life or disability insurance is:

Accepted Answer

A)  usually required as a condition for obtaining a loan. 
B)  a good idea for the borrower. 
C)  very costly. 
D)  recommended for borrowers over the age of 40. 
E)  not advantageous for lenders. 
A)  usually required as a condition for obtaining a loan. 
B)  a good idea for the borrower. 
C)  very costly. 
D)  recommended for borrowers over the age of 40. 
E)  not advantageous for lenders.

Question 19

Borrowing from _____ is not advisable.

Accepted Answer

A)  relatives 
B)  consumer finance companies 
C)  asset management companies 
D)  credit unions 
E)  commercial banks 
A)  relatives 
B)  consumer finance companies 
C)  asset management companies 
D)  credit unions 
E)  commercial banks

Question 20

If a loan has a prepayment penalty, there will be an additional cost to repay the loan early:

Accepted Answer

A)  if the loan is repaid before the first payment is due. 
B)  if the lender wants to recover part of the full interest that would have been earned. 
C)  if the borrower has defaulted on any monthly payment. 
D)  if the loan is not repaid before the loan maturity date. 
E)  if the loan is prepaid 3 months before the loan maturity. 
A)  if the loan is repaid before the first payment is due. 
B)  if the lender wants to recover part of the full interest that would have been earned. 
C)  if the borrower has defaulted on any monthly payment. 
D)  if the loan is not repaid before the loan maturity date. 
E)  if the loan is prepaid 3 months before the loan maturity.

In most cases, lenders take the physical property used as collateral from the borrower and liquidate the collateral until the loan is repaid in a lump sum.

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

Which of the following statements regarding loan collateral is true?

Most loans made by savings and loan associations (S&Ls) are:

INSTRUCTIONS: 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 majority of consumer loans are made with [ fixed | variable ] interest rates.

INSTRUCTIONS: 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 Rule of 78s charges more interest in the [ early | later ] months of the loan.

You can borrow, repay, and reborrow from a home equity loan in the same way as you can from a home equity credit line.

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan, the amount to be:

INSTRUCTIONS: 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 ] a large consumer loan is taken out.

The annual percentage rate (APR) on a single-payment loan of $1,000 at a simple interest rate of 12% is:

A _____ loan is intended to help consumers who have an unhealthy credit situation caused by overusing their credit.

The repayment of the principal of installment loans is made in a lump sum, and the repayment period of installment loans is 6 to 12 months.

If your debt safety ratio works out to 10%, you are relying too heavily on credit.

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

Home equity loans are similar to home equity credit lines because they are also not secured with any collateral.

You should consider your _____ before you take on a large consumer loan.

Purchasing credit life or disability insurance is:

Borrowing from _____ is not advisable.

If a loan has a prepayment penalty, there will be an additional cost to repay the loan early:

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

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 and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 7: Using Consumer Loans

In most cases, lenders take the physical property used as collateral from the borrower and liquidate the collateral until the loan is repaid in a lump sum.

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

Which of the following statements regarding loan collateral is true?

Most loans made by savings and loan associations (S&Ls) are:

INSTRUCTIONS: 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 majority of consumer loans are made with [ fixed | variable ] interest rates.

INSTRUCTIONS: 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 Rule of 78s charges more interest in the [ early | later ] months of the loan.

You can borrow, repay, and reborrow from a home equity loan in the same way as you can from a home equity credit line.

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan, the amount to be:

INSTRUCTIONS: 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 ] a large consumer loan is taken out.

The annual percentage rate (APR) on a single-payment loan of $1,000 at a simple interest rate of 12% is:

A _____ loan is intended to help consumers who have an unhealthy credit situation caused by overusing their credit.

The repayment of the principal of installment loans is made in a lump sum, and the repayment period of installment loans is 6 to 12 months.

If your debt safety ratio works out to 10%, you are relying too heavily on credit.

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

Home equity loans are similar to home equity credit lines because they are also not secured with any collateral.

You should consider your _____ before you take on a large consumer loan.

Purchasing credit life or disability insurance is:

Borrowing from _____ is not advisable.

If a loan has a prepayment penalty, there will be an additional cost to repay the loan early:

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

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 and Real Estate

Planning for Retirement

Preserving Your Estate

Filters