Question 1

Consumers whose debt burden has become very heavy might apply for:

Accepted Answer

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

Question 2

When the interest rate on savings is two times the interest rate on a loan,it is ____________. ​

Accepted Answer

A) less expensive to borrow to make a purchase 
B) less expensive to use your savings to make a purchase 
C) more expensive to borrow half the amount 
D) more expensive to borrow to save 
A) less expensive to borrow to make a purchase 
B) less expensive to use your savings to make a purchase 
C) more expensive to borrow half the amount 
D) more expensive to borrow to save A

Question 3

Which of the following is true of a consumer loan?

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 to finance the purchase of goods that are far too expensive. 
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 to finance the purchase of goods that are far too expensive. E

Question 4

Loans obtained by life insurance policyholders from their insurance companies are to be repaid on the repayment dates.

Accepted Answer

A) True 
 B)False

Question 5

If you don't have much down payment money,a ____________ can effectively act as the cheapest source of down payment. ​

Accepted Answer

A) rebate 
B) percent APR loan 
C) credit card 
D) commercial loan 
A) rebate 
B) percent APR loan 
C) credit card 
D) commercial loan

Question 6

The frequency of longer-term installment loans carrying variable interest rates is increasing.

Accepted Answer

A) True 
 B)False

Question 7

A legal claim that allows lenders to liquidate loan collateral,in case the borrower defaults,is called a ____________. ​

Accepted Answer

A) loan contract 
B) promissory note 
C) lien 
D) security claim 
A) loan contract 
B) promissory note 
C) lien 
D) security claim

Question 8

Consumer loans,like open account credits,result from a rather informal process.

Accepted Answer

A) True 
 B)False

Question 9

You are borrowing $1,000 with an APR of 10% and a loan maturity of one year.Total interest charges will be the highest when ____________. ​

Accepted Answer

A) you pay off the loan in 12 monthly installments 
B) you pay off the loan in 10 monthly installments 
C) you make one payment in full at the end of the year 
D) you prepay the loan 6 months prior to the maturity of the loan 
A) you pay off the loan in 12 monthly installments 
B) you pay off the loan in 10 monthly installments 
C) you make one payment in full at the end of the year 
D) you prepay the loan 6 months prior to the maturity of the loan

Question 10

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 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

Mason Corporation borrows funds for the expansion of its business.The loan is secured with the office building.Therefore,the office building serves as _____ for the loan.

Accepted Answer

A) a liability 
B) a collateral 
C) a debt 
D) an insurance 
E) a corporate deposit 
A) a liability 
B) a collateral 
C) a debt 
D) an insurance 
E) a corporate deposit

Question 14

Which of the following is true of installment loans?

Accepted Answer

A) Installment loans require the principal to be repaid in a single payment. 
B) Installment loans,like home equity loans,offer the benefit of tax deductibility on the interest paid on them. 
C) Installment loans are secured using only second mortgages. 
D) Installment loans are issued only by the federal government. 
E) Installment loans are revolving credit lines from which consumers can borrow,repay,and reborrow. 
A) Installment loans require the principal to be repaid in a single payment. 
B) Installment loans,like home equity loans,offer the benefit of tax deductibility on the interest paid on them. 
C) Installment loans are secured using only second mortgages. 
D) Installment loans are issued only by the federal government. 
E) Installment loans are revolving credit lines from which consumers can borrow,repay,and reborrow.

Question 15

Jamie is going to buy furniture with a single-payment loan that is discounted.The loan will be for $5,000 for 2 years at 10% interest.Calculate the annual percentage rate (APR)on this loan.(Show all work.)

Accepted Answer

Finance charge = $5,000 × 0.10

Question 16

The monthly payment on an 8%,36-month,add-on loan of $10,000 would be:

Accepted Answer

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

Question 17

Which of the following is true of loan maturity?

Accepted Answer

A) The longer the loan maturity,the higher the monthly payments. 
B) The shorter the loan maturity,the higher the total finance cost. 
C) The shorter the loan maturity,the higher the monthly payments. 
D) The longer the loan maturity,the lower the total finance cost. 
E) The shorter the loan maturity,the higher the prepayment penalty. 
A) The longer the loan maturity,the higher the monthly payments. 
B) The shorter the loan maturity,the higher the total finance cost. 
C) The shorter the loan maturity,the higher the monthly payments. 
D) The longer the loan maturity,the lower the total finance cost. 
E) The shorter the loan maturity,the higher the prepayment penalty.

Question 18

Fixed-rate loans are desirable if interest rates are expected to fall over the course of the loan.

Accepted Answer

A) True 
 B)False

Question 19

Downward Motors has offered Vicki either a $2,500 rebate or a 2%,4-year loan on the new SUV she is purchasing for $33,000 with a $3,000 down payment.Vicki has done her research and knows that she can get a 6%,4-year loan from her credit union.Should Vicki take the rebate or the 2% loan from the dealer? (Show your keystrokes.)

Accepted Answer

Taking the rebate and financin

Question 20

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

Accepted Answer

A) educational qualification 
B) history of auto ownership 
C) past employment 
D) budgeted expense 
A) educational qualification 
B) history of auto ownership 
C) past employment 
D) budgeted expense

Consumers whose debt burden has become very heavy might apply for:

When the interest rate on savings is two times the interest rate on a loan,it is ____________.

Which of the following is true of a consumer loan?

Loans obtained by life insurance policyholders from their insurance companies are to be repaid on the repayment dates.

If you don't have much down payment money,a ____________ can effectively act as the cheapest source of down payment.

The frequency of longer-term installment loans carrying variable interest rates is increasing.

A legal claim that allows lenders to liquidate loan collateral,in case the borrower defaults,is called a ____________.

Consumer loans,like open account credits,result from a rather informal process.

You are borrowing $1,000 with an APR of 10% and a loan maturity of one year.Total interest charges will be the highest when ____________.

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?

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?

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

Mason Corporation borrows funds for the expansion of its business.The loan is secured with the office building.Therefore,the office building serves as _____ for the loan.

Which of the following is true of installment loans?

Jamie is going to buy furniture with a single-payment loan that is discounted.The loan will be for $5,000 for 2 years at 10% interest.Calculate the annual percentage rate (APR)on this loan.(Show all work.)

The monthly payment on an 8%,36-month,add-on loan of $10,000 would be:

Which of the following is true of loan maturity?

Fixed-rate loans are desirable if interest rates are expected to fall over the course of the loan.

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

Understanding the Financial Planning Process

Using Financial Statements and Budgets

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, ETFS and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 7: Using Consumer Loans

Consumers whose debt burden has become very heavy might apply for:

When the interest rate on savings is two times the interest rate on a loan,it is ____________. ​

Which of the following is true of a consumer loan?

Loans obtained by life insurance policyholders from their insurance companies are to be repaid on the repayment dates.

If you don't have much down payment money,a ____________ can effectively act as the cheapest source of down payment. ​

The frequency of longer-term installment loans carrying variable interest rates is increasing.

A legal claim that allows lenders to liquidate loan collateral,in case the borrower defaults,is called a ____________. ​

Consumer loans,like open account credits,result from a rather informal process.

You are borrowing $1,000 with an APR of 10% and a loan maturity of one year.Total interest charges will be the highest when ____________. ​

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?

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?

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

Mason Corporation borrows funds for the expansion of its business.The loan is secured with the office building.Therefore,the office building serves as _____ for the loan.

Which of the following is true of installment loans?

Jamie is going to buy furniture with a single-payment loan that is discounted.The loan will be for $5,000 for 2 years at 10% interest.Calculate the annual percentage rate (APR)on this loan.(Show all work.)

The monthly payment on an 8%,36-month,add-on loan of $10,000 would be:

Which of the following is true of loan maturity?

Fixed-rate loans are desirable if interest rates are expected to fall over the course of the loan.

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

Understanding the Financial Planning Process

Using Financial Statements and Budgets

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, ETFS and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

When the interest rate on savings is two times the interest rate on a loan,it is ____________.

If you don't have much down payment money,a ____________ can effectively act as the cheapest source of down payment.

A legal claim that allows lenders to liquidate loan collateral,in case the borrower defaults,is called a ____________.

You are borrowing $1,000 with an APR of 10% and a loan maturity of one year.Total interest charges will be the highest when ____________.

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