Question 1

Most loans made by consumer finance companies are for larger amounts and are made to low risk borrowers.

Accepted Answer

A) True 
 B)False  False

Question 2

Consumer loans are often used by individuals today to purchase nondurable items.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following is recommended if you loan money to a friend or relative?

Accepted Answer

A)  Do it in a business-like fashion. 
B)  Charge interest if the loan is not to be quickly repaid. 
C)  Be sure both parties understand it is a loan,not a gift. 
D)  Lend only money you can afford to give away. 
E)  All of the above 
A)  Do it in a business-like fashion. 
B)  Charge interest if the loan is not to be quickly repaid. 
C)  Be sure both parties understand it is a loan,not a gift. 
D)  Lend only money you can afford to give away. 
E)  All of the above E

Question 4

Simple interest on an installment loan is charged only against the initial loan principal.

Accepted Answer

A) True 
 B)False

Question 5

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.
-It is [legal | illegal] for a lender to charge a prepayment penalty.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 6

Commercial banks generally charge lower interest rates than other lending institutions because:

Accepted Answer

A)  they make shorter term loans. 
B)  they usually take only the best credit risks. 
C)  depositors require lower rates. 
D)  they get their funds in the open credit market. 
E)  they make secured loans only. 
A)  they make shorter term loans. 
B)  they usually take only the best credit risks. 
C)  depositors require lower rates. 
D)  they get their funds in the open credit market. 
E)  they make secured loans only.

Question 7

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.
-If the proceeds from the sale of your repossessed collateral are insufficient to pay the balance due on your loan,the lender usually [can | cannot] collect the deficiency from you.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 8

Variable rate loans are desirable if interest rates are expected to fall in the future.

Accepted Answer

A) True 
 B)False

Question 9

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.
-A [sales finance company | captive finance company] purchases notes drawn up by sellers of typically big-ticket items.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 10

Savings and loan associations are allowed to make loans for things like cars,boats,and motorcycles.

Accepted Answer

A) True 
 B)False

Question 11

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.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 12

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 would begin two months after the loan is received.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 13

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 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

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.
-The best loan rates for consumer loans are usually from [savings and loan associations | consumer finance companies].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 16

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.
-[Public lenders | Private lenders] are more flexible in providing financial relief when borrowers are under pressure.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Installment loans are repaid in one payment.

Accepted Answer

A) True 
 B)False

Question 19

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan,the amount to be repaid is $1,900.80.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Most loans made by consumer finance companies are for larger amounts and are made to low risk borrowers.

Consumer loans are often used by individuals today to purchase nondurable items.

Which of the following is recommended if you loan money to a friend or relative?

Simple interest on an installment loan is charged only against the initial loan principal.

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. -It is [legal | illegal] for a lender to charge a prepayment penalty.

Commercial banks generally charge lower interest rates than other lending institutions because:

Variable rate loans are desirable if interest rates are expected to fall in the future.

Savings and loan associations are allowed to make loans for things like cars,boats,and motorcycles.

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 would begin two months after the loan is received.

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

To qualify for a Stafford loan,you must:

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

Installment loans are repaid in one payment.

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan,the amount to be repaid is $1,900.80.

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

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

Most loans made by consumer finance companies are for larger amounts and are made to low risk borrowers.

Consumer loans are often used by individuals today to purchase nondurable items.

Which of the following is recommended if you loan money to a friend or relative?

Simple interest on an installment loan is charged only against the initial loan principal.

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. -It is [legal | illegal] for a lender to charge a prepayment penalty.

Commercial banks generally charge lower interest rates than other lending institutions because:

Variable rate loans are desirable if interest rates are expected to fall in the future.

Savings and loan associations are allowed to make loans for things like cars,boats,and motorcycles.

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 would begin two months after the loan is received.

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

To qualify for a Stafford loan,you must:

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

Installment loans are repaid in one payment.

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan,the amount to be repaid is $1,900.80.

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

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