Question 1

If you borrow money on a single-payment loan and discover that you cannot pay it back when it is due, you should:

Accepted Answer

A)  purchase a credit card. 
B)  unsecure the loan. 
C)  pay a prepayment penalty. 
D)  negotiate a rollover. 
E)  file for bankruptcy. 
A)  purchase a credit card. 
B)  unsecure the loan. 
C)  pay a prepayment penalty. 
D)  negotiate a rollover. 
E)  file for bankruptcy.

Question 2

Which of the following is the monthly payment on an 8%, 36-month, add-on loan of $10,000? (Round the answer to the nearest dollar.)

Accepted Answer

A)  $278 
B)  $300 
C)  $314 
D)  $344 
E)  $380 
A)  $278 
B)  $300 
C)  $314 
D)  $344 
E)  $380

Question 3

Which of the following statements regarding credit unions is true?

Accepted Answer

A)  They make secured loans only to nonmembers. 
B)  They are owned and managed by the government. 
C)  They provide installment loans to their members. 
D)  They charge higher interest rates than other sources of consumer loans. 
E)  They are for-profit organizations. 
A)  They make secured loans only to nonmembers. 
B)  They are owned and managed by the government. 
C)  They provide installment loans to their members. 
D)  They charge higher interest rates than other sources of consumer loans. 
E)  They are for-profit organizations.

Question 4

Jamil is purchasing a new truck for $30,000. He is making a $2,000 down payment and will be making 60 monthly payments of $541 each. What are the total finance charges on this loan? (Show all work.)

Accepted Answer

Loan Amount = $30,000 - $2,000

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. 
When the interest rate on savings is higher than the interest rate on a loan, it is less expensive to [ borrow | use savings ] to make a purchase.

Accepted Answer

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

Question 6

Which of the following is a feature of a home equity loan?

Accepted Answer

A)  The interest rate on a home equity loan is higher than that on other loans. 
B)  The interest paid on a home equity loan is usually tax deductible. 
C)  A home equity loan is generally the first mortgage loan. 
D)  A home equity loan is a single-payment loan. 
E)  A home equity loan is an unsecured loan. 
A)  The interest rate on a home equity loan is higher than that on other loans. 
B)  The interest paid on a home equity loan is usually tax deductible. 
C)  A home equity loan is generally the first mortgage loan. 
D)  A home equity loan is a single-payment loan. 
E)  A home equity loan is an unsecured loan.

Question 7

Jenny's monthly take-home pay is $5,000, and her total monthly payments are $1,000. Which of the following is Jenny's debt safety ratio?

Accepted Answer

A)  10% 
B)  5% 
C)  20% 
D)  35% 
E)  40% 
A)  10% 
B)  5% 
C)  20% 
D)  35% 
E)  40%

Question 8

When comparing two installment loans with the same principal and annual percentage rate (APR), the loan with:

Accepted Answer

A)  the longer maturity will have the lower monthly payment and the higher total costs. 
B)  the shorter maturity will have the lower monthly payment and the higher total costs. 
C)  the longer maturity will have the higher monthly payment and the higher total costs. 
D)  the shorter maturity will have the lower monthly payment and the lower total costs. 
E)  the longer maturity will have the higher monthly payment and the lower total costs. 
A)  the longer maturity will have the lower monthly payment and the higher total costs. 
B)  the shorter maturity will have the lower monthly payment and the higher total costs. 
C)  the longer maturity will have the higher monthly payment and the higher total costs. 
D)  the shorter maturity will have the lower monthly payment and the lower total costs. 
E)  the longer maturity will have the higher monthly payment and the lower total costs.

Question 9

Loans obtained by life insurance policyholders from their insurance companies are to be repaid on the date established by the loan documents.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  increased death benefits to beneficiaries. 
B)  increased premiums. 
C)  no specific repayment date. 
D)  annual percentage rates (APRs) higher than other sources. 
E)  a fixed interest rate. 
A)  increased death benefits to beneficiaries. 
B)  increased premiums. 
C)  no specific repayment date. 
D)  annual percentage rates (APRs) higher than other sources. 
E)  a fixed interest rate.

Question 11

Which of the following statements regarding consumer finance companies is true?

Accepted Answer

A)  Consumer finance companies accept deposits and give small loans to their members. 
B)  Consumer finance companies make loans of any size to low-risk borrowers. 
C)  Consumer finance companies offer consumer loans at the lowest interest rates. 
D)  Consumer finance companies offer consumer loans only for home mortgage lending. 
E)  Consumer finance companies make secured and unsecured loans to qualified individuals. 
A)  Consumer finance companies accept deposits and give small loans to their members. 
B)  Consumer finance companies make loans of any size to low-risk borrowers. 
C)  Consumer finance companies offer consumer loans at the lowest interest rates. 
D)  Consumer finance companies offer consumer loans only for home mortgage lending. 
E)  Consumer finance companies make secured and unsecured loans to qualified individuals.

Question 12

Sales finance companies:

Accepted Answer

A)  buy installment loans from consumers. 
B)  buy installment loans from retailers. 
C)  sell installment loans to retailers. 
D)  buy installment loans from banks. 
E)  sell installment loans to banks. 
A)  buy installment loans from consumers. 
B)  buy installment loans from retailers. 
C)  sell installment loans to retailers. 
D)  buy installment loans from banks. 
E)  sell installment loans to banks.

Question 13

A single-payment loan used to finance a purchase when the cash to be used for repayment is known to be forthcoming in the near future is a form of:

Accepted Answer

A)  a collateral note. 
B)  interim financing. 
C)  cumulative borrowing. 
D)  a loan rollover. 
E)  a loan extension. 
A)  a collateral note. 
B)  interim financing. 
C)  cumulative borrowing. 
D)  a loan rollover. 
E)  a loan extension.

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. 
Almost half of all consumer loans are made by [ commercial banks | finance companies ].

Accepted Answer

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

Question 15

If Liza's debt safety ratio is 15% and her monthly take-home pay is $4,500, which of the following equals her total monthly payments?

Accepted Answer

A)  $675 
B)  $1,200 
C)  $500 
D)  $450 
E)  $890 
A)  $675 
B)  $1,200 
C)  $500 
D)  $450 
E)  $890

Question 16

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

Accepted Answer

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

Question 17

Which of the following statements regarding a consumer loan is true?

Accepted Answer

A)  A consumer loan is used chiefly to make repeated purchases of relatively low-cost goods and services. 
B)  A consumer loan results from a rather informal process and involves no negotiated contracts. 
C)  A consumer loan provides credit cards and checks to the consumers. 
D)  A consumer loan provides revolving credit to the consumers. 
E)  A consumer loan is used mainly to borrow money to pay for big-ticket items. 
A)  A consumer loan is used chiefly to make repeated purchases of relatively low-cost goods and services. 
B)  A consumer loan results from a rather informal process and involves no negotiated contracts. 
C)  A consumer loan provides credit cards and checks to the consumers. 
D)  A consumer loan provides revolving credit to the consumers. 
E)  A consumer loan is used mainly to borrow money to pay for big-ticket items.

Question 18

When the interest rate on savings is lower than the interest rate on a loan, it is less expensive to use your savings to make a purchase.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements regarding single-payment loans is true?

Accepted Answer

A)  They are generally unsecured and do not have any collateral. 
B)  They usually mature in 1 year or less. 
C)  They are usually provided by retailers. 
D)  They are generally used to finance auto purchases. 
E)  They are provided by sales finance companies. 
A)  They are generally unsecured and do not have any collateral. 
B)  They usually mature in 1 year or less. 
C)  They are usually provided by retailers. 
D)  They are generally used to finance auto purchases. 
E)  They are provided by sales finance companies.

Question 20

Credit unions lend money to qualified people who are their:

Accepted Answer

A)  employees. 
B)  members. 
C)  suppliers. 
D)  policyholders. 
E)  stockholders. 
A)  employees. 
B)  members. 
C)  suppliers. 
D)  policyholders. 
E)  stockholders.

If you borrow money on a single-payment loan and discover that you cannot pay it back when it is due, you should:

Which of the following is the monthly payment on an 8%, 36-month, add-on loan of $10,000? (Round the answer to the nearest dollar.)

Which of the following statements regarding credit unions is true?

Jamil is purchasing a new truck for $30,000. He is making a $2,000 down payment and will be making 60 monthly payments of $541 each. What are the total finance charges on this loan? (Show all work.)

Which of the following is a feature of a home equity loan?

Jenny's monthly take-home pay is $5,000, and her total monthly payments are $1,000. Which of the following is Jenny's debt safety ratio?

When comparing two installment loans with the same principal and annual percentage rate (APR), the loan with:

Loans obtained by life insurance policyholders from their insurance companies are to be repaid on the date established by the loan documents.

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

Which of the following statements regarding consumer finance companies is true?

Sales finance companies:

A single-payment loan used to finance a purchase when the cash to be used for repayment is known to be forthcoming in the near future is a form of:

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. Almost half of all consumer loans are made by [ commercial banks | finance companies ].

If Liza's debt safety ratio is 15% and her monthly take-home pay is $4,500, which of the following equals her total monthly payments?

Which of the following statements regarding a consumer loan is true?

When the interest rate on savings is lower than the interest rate on a loan, it is less expensive to use your savings to make a purchase.

Which of the following statements regarding single-payment loans is true?

Credit unions lend money to qualified people who are their:

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

If you borrow money on a single-payment loan and discover that you cannot pay it back when it is due, you should:

Which of the following is the monthly payment on an 8%, 36-month, add-on loan of $10,000? (Round the answer to the nearest dollar.)

Which of the following statements regarding credit unions is true?

Jamil is purchasing a new truck for $30,000. He is making a $2,000 down payment and will be making 60 monthly payments of $541 each. What are the total finance charges on this loan? (Show all work.)

Which of the following is a feature of a home equity loan?

Jenny's monthly take-home pay is $5,000, and her total monthly payments are $1,000. Which of the following is Jenny's debt safety ratio?

When comparing two installment loans with the same principal and annual percentage rate (APR), the loan with:

Loans obtained by life insurance policyholders from their insurance companies are to be repaid on the date established by the loan documents.

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

Which of the following statements regarding consumer finance companies is true?

Sales finance companies:

A single-payment loan used to finance a purchase when the cash to be used for repayment is known to be forthcoming in the near future is a form of:

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. Almost half of all consumer loans are made by [ commercial banks | finance companies ].

If Liza's debt safety ratio is 15% and her monthly take-home pay is $4,500, which of the following equals her total monthly payments?

Which of the following statements regarding a consumer loan is true?

When the interest rate on savings is lower than the interest rate on a loan, it is less expensive to use your savings to make a purchase.

Which of the following statements regarding single-payment loans is true?

Credit unions lend money to qualified people who are their:

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