Exam 7: Choosing a Source of Credit: The Costs of Credit Alternatives

Frank West wants to borrow money for three years to purchase a new boat. He has been offered a seven percent fixed rate loan and also a variable rate loan that has an initial rate of five percent. By choosing the variable rate loan, Chuck is reducing the lender's risk by:

Parents or family members are often the source of the least expensive loans.

There are no costs involved in filing for a bankruptcy.

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month. Under the rule of 78s, what is the amount of interest included in her first payment?

According to consumer affairs experts, the nation's number one family financial problem is:

The Consumer Credit Counseling Service counseling is usually free.

Credit unions will provide loans to non-members in some situations.

You can often obtain medium-priced loans from:

If you receive a phone call from a debt collector, s/he must send you a written notice within ____________ days.

Which method of payment is likely to be the least expensive in the long run?

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Henry Garrison starts the month with a balance on his credit card of $1,000. The average daily balance for the month including purchase is $883. The average daily balance for the month excluding new purchase is $750. The bank charges 1.5 percent per month and uses the average daily balance including new purchases method. What would Henry's finance charges be for the month?

The Truth in Lending law does not set the interest rates or tell the creditor how to make interest calculations.

Patricia Newton is going to buy a new car, and she needs to apply for a loan to cover the purchase. She knows she can get a loan for up to 6 years, but she would prefer a shorter-term loan. She selects a 4-year loan. Patricia reducing her lender's risk by:

By evaluating your credit options, you may:

The most commonly purchased type of credit insurance is:

The two most common methods of calculating interest are compound and simple interest formulas.

Who financially supports the Consumer Credit Counseling Service?

If creditors add finance charges after subtracting payments made during the billing period, this is called the:

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.