Question 1

Consolidation loans are used to purchase new furniture and appliances when many items are needed at the same time.

Accepted Answer

A) True 
 B)False

Question 2

Which source of consumer loans often has the most favorable terms?

Accepted Answer

A)  Commercial banks 
B)  Credit unions 
C)  Consumer finance companies 
D)  Savings and loan associations 
E)  None of the above 
A)  Commercial banks 
B)  Credit unions 
C)  Consumer finance companies 
D)  Savings and loan associations 
E)  None of the above

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Using [simple | add-on] interest would be less expensive for the borrower when determining the total to be paid to the lender.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 4

If you needed a loan to buy furniture,the lowest interest rate would usually be available from a

Accepted Answer

A)  savings and loan association. 
B)  pawn shop. 
C)  captive finance company. 
D)  consumer finance company. 
E)  credit union. 
A)  savings and loan association. 
B)  pawn shop. 
C)  captive finance company. 
D)  consumer finance company. 
E)  credit union.

Question 5

Purchasing credit life or disability insurance protection is usually

Accepted Answer

A)  required in order to make the loan. 
B)  non-negotiable. 
C)  at the lender's option. 
D)  very costly. 
E)  a good idea for the borrower. 
A)  required in order to make the loan. 
B)  non-negotiable. 
C)  at the lender's option. 
D)  very costly. 
E)  a good idea for the borrower.

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Calculating interest using the [discount | simple interest] method will result in the higher APR on a single-payment loan.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 7

The best loan rates for consumer loans are usually from consumer finance companies.

Accepted Answer

A) True 
 B)False

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Your budget should be considered [before | after] taking on a large consumer loan.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 9

Credit unions grant loans only to members of the credit union.

Accepted Answer

A) True 
 B)False

Question 10

Because no written contract is usually required,borrowing from friends and relatives is advisable.

Accepted Answer

A) True 
 B)False

Question 11

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-You are borrowing $1,000,APR is 10%,and the loan maturity is one year.Total interest charges will be higher if [you pay off the loan in 12 monthly installments | you make one payment in full at the end of the year].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 12

When credit life or disability insurance protection is required as a condition of a loan,the cost

Accepted Answer

A)  must be added to the finance charge. 
B)  must be included in the APR calculation. 
C)  is generally very reasonable. 
D)  a and b 
E)  a,b,and c 
A)  must be added to the finance charge. 
B)  must be included in the APR calculation. 
C)  is generally very reasonable. 
D)  a and b 
E)  a,b,and c

Question 13

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-A finance company uses the discount method of calculating interest.The loan principal is $5,000,the interest rate is 10%,and repayment is expected in two years.You will receive [$5,000 | $4,000] from the lender.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 14

To qualify for a Stafford loan,you must

Accepted Answer

A)  demonstrate financial need. 
B)  have a good credit rating. 
C)  make satisfactory academic progress. 
D)  all of the above 
E)  a and c only 
A)  demonstrate financial need. 
B)  have a good credit rating. 
C)  make satisfactory academic progress. 
D)  all of the above 
E)  a and c only

Question 15

When comparing two installment loans with the same principal and APR,the loan with the shorter maturity will have the lower monthly payment and the lower total costs.

Accepted Answer

A) True 
 B)False

Question 16

Borrowing to pay for a college education is a legitimate use of credit.

Accepted Answer

A) True 
 B)False

Question 17

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-There is a limit on the [number | dollar amount] of student loans you can have.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 18

A consumer loan probably would not be used to

Accepted Answer

A)  purchase an auto. 
B)  pay for college tuition. 
C)  consolidate several loans into one. 
D)  finance a special vacation. 
E)  buy back-to-school clothes. 
A)  purchase an auto. 
B)  pay for college tuition. 
C)  consolidate several loans into one. 
D)  finance a special vacation. 
E)  buy back-to-school clothes.

Question 19

When loaning money to a friend or family member,it is advisable to lend only the amount that you can afford to give away.

Accepted Answer

A) True 
 B)False

Question 20

Sales finance companies

Accepted Answer

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

Consolidation loans are used to purchase new furniture and appliances when many items are needed at the same time.

Which source of consumer loans often has the most favorable terms?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Using [simple | add-on] interest would be less expensive for the borrower when determining the total to be paid to the lender.

If you needed a loan to buy furniture,the lowest interest rate would usually be available from a

Purchasing credit life or disability insurance protection is usually

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Calculating interest using the [discount | simple interest] method will result in the higher APR on a single-payment loan.

The best loan rates for consumer loans are usually from consumer finance companies.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Your budget should be considered [before | after] taking on a large consumer loan.

Credit unions grant loans only to members of the credit union.

Because no written contract is usually required,borrowing from friends and relatives is advisable.

When credit life or disability insurance protection is required as a condition of a loan,the cost

To qualify for a Stafford loan,you must

When comparing two installment loans with the same principal and APR,the loan with the shorter maturity will have the lower monthly payment and the lower total costs.

Borrowing to pay for a college education is a legitimate use of credit.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -There is a limit on the [number | dollar amount] of student loans you can have.

A consumer loan probably would not be used to

When loaning money to a friend or family member,it is advisable to lend only the amount that you can afford to give away.

Sales 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

Planning for Retirement

Preserving Your Estate

Filters

Exam 7: Using Consumer Loans

Consolidation loans are used to purchase new furniture and appliances when many items are needed at the same time.

Which source of consumer loans often has the most favorable terms?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Using [simple | add-on] interest would be less expensive for the borrower when determining the total to be paid to the lender.

If you needed a loan to buy furniture,the lowest interest rate would usually be available from a

Purchasing credit life or disability insurance protection is usually

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Calculating interest using the [discount | simple interest] method will result in the higher APR on a single-payment loan.

The best loan rates for consumer loans are usually from consumer finance companies.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Your budget should be considered [before | after] taking on a large consumer loan.

Credit unions grant loans only to members of the credit union.

Because no written contract is usually required,borrowing from friends and relatives is advisable.

When credit life or disability insurance protection is required as a condition of a loan,the cost

To qualify for a Stafford loan,you must

When comparing two installment loans with the same principal and APR,the loan with the shorter maturity will have the lower monthly payment and the lower total costs.

Borrowing to pay for a college education is a legitimate use of credit.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -There is a limit on the [number | dollar amount] of student loans you can have.

A consumer loan probably would not be used to

When loaning money to a friend or family member,it is advisable to lend only the amount that you can afford to give away.

Sales 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

Planning for Retirement

Preserving Your Estate

Filters