Exam 6: Choosing a Source of Credit: The Costs of Credit Alternatives

Which of the following allows a debtor with a regular income to extinguish his or her debts from future earnings or other property over a period of time?

Over-indebtedness is one of the nation's main family financial problems.

Credit disability insurance can be used when the borrower is unable to pay back a loan in a case of illness or injury.

A float refers to:

Your only choice in declaring personal bankruptcy is through an assignment in bankruptcy.

There is never a charge for any service provided by a credit counsellor.

It takes considerably longer to repay an interest only line of credit than it takes to repay a traditional consumer installment loan.

Both consumer proposals and declarations of insolvency through an assignment in bankruptcy are considered an easy way out of debt.

What is the EAR for a $100 loan when the interest is compounded monthly and the stated annual interest rate is 7 percent?

If creditors add finance charges after subtracting payments made during the billing period, this is called the previous balance method.

What is monthly payment for a $20,000 amortized loan to purchase a car payable over 3 years at an annual interest rate of 6%?

Credit unions often offer the same range of consumer loans that banks and other financial institutions do.

During the last decade, the personal bankruptcy rate has increased almost 8 percent annually.

The most frequent type of bankruptcy or proposals in Canada in 2014 was:

What effective rate of interest is being charged when the quoted APR is 6%, compounded semi-annually?

Compounding the quarterly percentage rate four times a year is equivalent to:

For some debtors, bankruptcy has become an acceptable tool of credit management.

The fairest method of calculating interest is the average daily balance method.

Which of the following are signs of debt problems?

Consumer credit counselling services are often offered by Universities.