Exam 7: Using Consumer Loans

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -When the interest rate on savings is higher than the interest rate on a loan,it is less expensive to [borrow | use savings] to make a purchase.

The majority of loans made by savings and loan associations are ____ loans.

When simple interest is used,the stated rate of interest on single payment loans is equal to the annual percentage rate (APR).

Bob Shockey borrowed $25,000 from his $250,000 cash value life insurance policy to send his daughter to private college.Assuming he pays interest as it accrues,if Bob dies before the debt is repaid his beneficiary will receive

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Loan repayment of a [PLUS | Stafford] loan begins within 60 days of loan disbursement.

The average annual cost of a college education at a state school is about $33,000.

A single-payment loan

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

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Calculating interest using the [discount | simple interest] method will result in the higher APR on a single-payment loan.

Jamil is purchasing a new truck for $30,000.Jamil is making a $2,000 down payment,and he will make 60 monthly payments of $541 each.What are the total finance costs on this loan?

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -When interest rates are falling,you would prefer a [fixed-rate | variable-rate] loan.

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.

A characteristic of consumer loans is that they

The primary type of loan made by a savings and loan association is the long-term installment loan used for the purchase of a home.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Loans to relatives and friends should be [verbal | written] agreements.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Borrowing from relatives is [highly | seldom] recommended by financial advisors.

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

Consumer finance companies usually charge lower rates of interest than commercial banks.

Consolidation loans are often used to help borrowers straighten out a critical financial situation.

When the simple-interest method is used to determine finance charges,the interest is calculated based on the