Exam 7: Using Consumer Loans

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. -If you want to calculate whether to take the rebate or the low interest rate on an auto financing deal,it would be most useful to have [time value of money tables | a financial calculator].

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

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 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.

A consumer loan probably would not be used to:

Which of the following loan sources is the most expensive?

Sales finance companies commonly purchase the retail installment contracts of businesses that sell big-ticket items such as automobiles,furniture,and appliances.

The repayment period on the installment loans is six to twelve months.

Besides the finance charge,you should also consider _____ when you shop for a consumer loan.

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

In most cases,lenders will liquidate the collateral until the loan is paid.

It is becoming increasingly frequent for longer-term installment loans to carry variable interest rates.

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 homework and knows that she can get a 6%,4-year loan at his credit union.Should Vicki take the rebate or the 2% loan from the dealer? (Show your key strokes.)

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

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 rising,you would prefer a [fixed-rate | variable-rate] 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. -There is a limit on the [number | dollar amount] of student loans you can have.

Which of the following is to be taken into account before considering a student loan?

The most accurate method currently available for calculating the annual percentage rate (APR)on an add-on loan is the Rule of 78.

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

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