Question 1

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.

Question 2

Only stocks can be used as collateral for personal loans.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is true of credit unions?

Accepted Answer

A) They make secured loans only to non-members. 
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 profit-making organizations. 
A) They make secured loans only to non-members. 
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 profit-making organizations.

Question 4

The debt safety ratio indicates the total assets owned by an individual.

Accepted Answer

A) True 
 B)False

Question 5

The add-on method is less expensive than the simple interest method when the stated rates of interest are identical.

Accepted Answer

A) True 
 B)False

Question 6

Loan repayment under the Parent Loans for Undergraduate Students (PLUS)program normally begins within ____________ of loan disbursement. ​

Accepted Answer

A) 60 days 
B) 90 days 
C) 120 days 
D) 180 days 
A) 60 days 
B) 90 days 
C) 120 days 
D) 180 days

Question 7

If a loan has a prepayment penalty,there will be:

Accepted Answer

A) no additional cost to repay the loan early. 
B) an additional cost to repay the loan early. 
C) an additional cost to repay the loan if the borrower has defaulted any monthly payment. 
D) an additional cost to repay the loan if the loan is not repaid before the loan maturity. 
E) no additional cost to repay the loan early only if the loan is prepaid 3 months before the loan maturity. 
A) no additional cost to repay the loan early. 
B) an additional cost to repay the loan early. 
C) an additional cost to repay the loan if the borrower has defaulted any monthly payment. 
D) an additional cost to repay the loan if the loan is not repaid before the loan maturity. 
E) no additional cost to repay the loan early only if the loan is prepaid 3 months before the loan maturity.

Question 8

The ____________ on a student loan is (are)sometimes tax deductible. ​

Accepted Answer

A) total interest and the principal amount paid 
B) interest paid 
C) interest and the principal amount paid over the first 5 years 
D) interest and the principal amount paid over the first 3 years 
A) total interest and the principal amount paid 
B) interest paid 
C) interest and the principal amount paid over the first 5 years 
D) interest and the principal amount paid over the first 3 years

Question 9

A chattel mortgage is an instrument that gives lenders title to a property in the event of default.

Accepted Answer

A) True 
 B)False

Question 10

It is better to use your savings instead of borrowing to make a purchase when:

Accepted Answer

A) the borrower has adequate savings. 
B) interest rates are rising. 
C) interest rates are falling. 
D) the cost of borrowing is greater than the interest earned on savings. 
E) the interest earned on savings is greater than the interest paid on the loan. 
A) the borrower has adequate savings. 
B) interest rates are rising. 
C) interest rates are falling. 
D) the cost of borrowing is greater than the interest earned on savings. 
E) the interest earned on savings is greater than the interest paid on the loan.

Question 11

If the proceeds from the sale of your repossessed collateral are insufficient to pay off the balance due on your loan,the lender can usually collect the remaining amount from you.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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) disbursed to the borrower is $2,400 
C) repaid is $2,650.60 
D) disbursed to the borrower is $2,650.60 
A) repaid is $2,400 
B) disbursed to the borrower is $2,400 
C) repaid is $2,650.60 
D) disbursed to the borrower is $2,650.60

Question 14

Which of the following is true of loan maturity?

Accepted Answer

A) The longer the loan maturity,the higher the amount of interest paid. 
B) The shorter the loan maturity,the higher the total cost of borrowing. 
C) The longer the loan maturity,the higher the monthly payments. 
D) The shorter the loan maturity,the lower the monthly payments. 
E) The longer the loan maturity,the lower the total cost of borrowing. 
A) The longer the loan maturity,the higher the amount of interest paid. 
B) The shorter the loan maturity,the higher the total cost of borrowing. 
C) The longer the loan maturity,the higher the monthly payments. 
D) The shorter the loan maturity,the lower the monthly payments. 
E) The longer the loan maturity,the lower the total cost of borrowing.

Question 15

It is legal for a lender to charge a prepayment penalty.

Accepted Answer

A) True 
 B)False

Question 16

_____ loans do not have to be repaid until after you graduate from college.

Accepted Answer

A) Stafford and Perkins 
B) Stafford and Parent Loans for Undergraduate Students (PLUS) 
C) Perkins and Parent Loans for Undergraduate Students (PLUS) 
D) Arthurs and Sallie Mae 
E) Perkins and Arthurs 
A) Stafford and Perkins 
B) Stafford and Parent Loans for Undergraduate Students (PLUS) 
C) Perkins and Parent Loans for Undergraduate Students (PLUS) 
D) Arthurs and Sallie Mae 
E) Perkins and Arthurs

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is true of consumer finance companies?

Accepted Answer

A) Consumer finance companies always charge lower rates of interest than commercial banks. 
B) Consumer finance companies make large loans 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 (signature)loans to qualified individuals. 
A) Consumer finance companies always charge lower rates of interest than commercial banks. 
B) Consumer finance companies make large loans 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 (signature)loans to qualified individuals.

Question 19

Using the ____________ would be least expensive for the borrower when determining the total amount to be paid to the lender. ​

Accepted Answer

A) simple interest method 
B) add-on interest method 
C) discount method 
D) sum-of-the-digits method 
A) simple interest method 
B) add-on interest method 
C) discount method 
D) sum-of-the-digits method

Question 20

Consumer finance companies:

Accepted Answer

A) offer the highest interest rate on installment loans. 
B) are cooperative financial institutions that are owned by its members. 
C) are non-profit financial institutions. 
D) accept deposits from their members and use the deposits for lending. 
E) are managed by large manufacturing companies. 
A) offer the highest interest rate on installment loans. 
B) are cooperative financial institutions that are owned by its members. 
C) are non-profit financial institutions. 
D) accept deposits from their members and use the deposits for lending. 
E) are managed by large manufacturing companies.

Credit unions lend money to qualified people who are their:

Only stocks can be used as collateral for personal loans.

Which of the following statements is true of credit unions?

The debt safety ratio indicates the total assets owned by an individual.

The add-on method is less expensive than the simple interest method when the stated rates of interest are identical.

Loan repayment under the Parent Loans for Undergraduate Students (PLUS)program normally begins within ____________ of loan disbursement.

If a loan has a prepayment penalty,there will be:

The ____________ on a student loan is (are)sometimes tax deductible.

A chattel mortgage is an instrument that gives lenders title to a property in the event of default.

It is better to use your savings instead of borrowing to make a purchase when:

If the proceeds from the sale of your repossessed collateral are insufficient to pay off the balance due on your loan,the lender can usually collect the remaining amount from you.

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

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

Which of the following is true of loan maturity?

It is legal for a lender to charge a prepayment penalty.

_____ loans do not have to be repaid until after you graduate from college.

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

Which of the following is true of consumer finance companies?

Using the ____________ would be least expensive for the borrower when determining the total amount to be paid to the lender.

Consumer finance companies:

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

Credit unions lend money to qualified people who are their:

Only stocks can be used as collateral for personal loans.

Which of the following statements is true of credit unions?

The debt safety ratio indicates the total assets owned by an individual.

The add-on method is less expensive than the simple interest method when the stated rates of interest are identical.

Loan repayment under the Parent Loans for Undergraduate Students (PLUS)program normally begins within ____________ of loan disbursement. ​

If a loan has a prepayment penalty,there will be:

The ____________ on a student loan is (are)sometimes tax deductible. ​

A chattel mortgage is an instrument that gives lenders title to a property in the event of default.

It is better to use your savings instead of borrowing to make a purchase when:

If the proceeds from the sale of your repossessed collateral are insufficient to pay off the balance due on your loan,the lender can usually collect the remaining amount from you.

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

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

Which of the following is true of loan maturity?

It is legal for a lender to charge a prepayment penalty.

_____ loans do not have to be repaid until after you graduate from college.

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

Which of the following is true of consumer finance companies?

Using the ____________ would be least expensive for the borrower when determining the total amount to be paid to the lender. ​

Consumer finance companies:

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

Loan repayment under the Parent Loans for Undergraduate Students (PLUS)program normally begins within ____________ of loan disbursement.

The ____________ on a student loan is (are)sometimes tax deductible.

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

Using the ____________ would be least expensive for the borrower when determining the total amount to be paid to the lender.