Deck 3: Consumer Credit

Question 1

Two consumers borrowed $10,000 for 5 years.Bob has a credit score of 650 and has an interest rate of 11.5%,whereas Tyree has a credit score of 710 and has an interest rate of 8.0%.What will be the total difference between what the two men pay?

A) $1,030.20
B) $2,165.40
C) $2,195.60
D) $3,195.80

Answer 1

$1,030.20

Question 2

What is the monthly periodic rate on a loan with an APR of 18.6%?

A) 0.62%
B) 0.93%
C) 1.55%
D) 1.86%

Answer 2

1.55%

Question 3

Dr.Drake is thinking about retirement and decides to sail around the world once he retires.He buys a sailboat for $125,000.He borrows the money at an APR of 7.5% for five years.How much will his total interest be?

A) $46,875.30
B) $36,875.40
C) $25,284.40
D) $17,388.80

Answer 3

$25,284.40

Question 4

Mantago wants to borrow $10,000 to buy a used car.He examined his budget and decided that he can afford a payment of $200 a month.If his bank offers him an APR of 7.5%,how long should he borrow the money so he can afford his monthly payment?

A) 3.5 years
B) 4 years
C) 4.5 years
D) 5 years

Question 5

The total interest on a 5 year 5.2% loan with a principal of $10,000 is 10,000 $\times$ 0.052 $\times$ 5 = $2,600.

Question 6

Yanni received her monthly credit card statement in the mail,the summary of which is shown below.When she calculated the new balance for the month,she arrived at a different amount than the credit card company.What should be the correct new balance? ​ ​

A) $3,576.28
B) $3,676.28
C) $3,766.28
D) $3,776.28

Question 7

Lisa made this spreadsheet to compare her options when she decided to purchase a living room set on an installment plan. ​ ​
What spreadsheet formula should she input into F2?

A) E2 - A2 - B2
B) A2 - E2 + B2
C) E2 - A2
D) E2 + A2

Question 8

FICO scores range from 300 to about 850.A score above 770 is excellent,a score above 700 is good,and a score below 600 is considered a credit risk.

Question 9

A debit card is a type of charge card of which the monthly bill must be paid in full.

Question 10

The Truth-in-Lending Act protects consumers from harassment from creditors.

Question 11

Jerry buys a $2,700 motorcycle on a deferred payment plan.There is no down payment and no interest for 18 months.Jerry must make a minimum payment of $75 a month.To avoid a retroactive APR of 21%,he must pay the balance in full before the 18 months has passed.If he pays $75 each month,how much should he pay the last month to avoid the interest charges?

A) $1,350
B) $1,425
C) $1,500
D) $2,075

Question 12

Last month,the ending balance on Maryanne's MasterCard was $1,789,the average daily balance was $755,and the monthly periodic rate is 1.85%.Her finance charge can be calculated by multiplying the ending balance times the monthly periodic rate.So the finance charge is $1,789 $\times$ 0.0185 = $33.10.

Question 13

Jackson and Kate Jones do not pay their credit card in full each month,so they incur finance charges.On their last credit card statement,the average daily balance is $875,and the monthly periodic rate is 2.25%.What should be the finance charge on the statement?

A) $19.69
B) $20.25
C) $87.50
D) $196.88

Question 14

Taneeka borrowed $12,000 for a car for 6 years at an APR of 7.25%.Her monthly payment will be $206.03.

Question 15

Isabella wants to purchase a new refrigerator.When she applies for an installment loan at the appliance store,her loan application is turned down.What consumer law says that a lender must give her the reason,in writing,that she was denied the loan?

A) Truth-in-Lending Act
B) Equal Opportunity Act
C) Fair Credit Reporting Act
D) Fair Debt Collection Practices Act

Question 16

Regina pays her credit card balance in full each month.Last month her average daily balance was $345 and the APR is 11.2%.The finance charge on her current month's statement is $13.22.

Question 17

Max found a car he wants to buy that costs $16,000.He can afford to pay $250 a month for the car.His bank offers him a car loan of 7.3%.The length of his loan should be about 5 years,so he can afford the payments.

Question 18

A FICO score is named after its creator,Fair,Isaac,and Company.It summarizes the probability that a person with debt will repay that debt.

Question 19

Use the summary section of the monthly credit card statement below to calculate the finance charge. ​

A) $33.54
B) $12.98
C) $10.06
D) $9.38

Question 20

Interest can be the money paid by a bank to a consumer as compensation for keeping his or her money in that bank.Interest can also be the money paid to a bank for the use of its money.

Question 21

Kenise will begin college as a freshman next fall and has received a 10-year $5,500 Federal Direct Unsubsidized Loan with an interest rate of 6.8%.She will be required to begin making payments six months after graduation.How much interest will accrue while she is still in school and over the six-month grace period?

Question 22

Asa's most recent credit card statement had a balance of $2,622.77.The minimum payment warning box indicates that it will take 12 years to pay off the card if he makes the minimum payment of $28 per month.If he makes a monthly payment of $100,it will take 3 years to pay off the balance.What will be the percent increase in total payments if Asa only pays the minimum rather than the $100 per month?

Question 23

Malika has a credit card balance of $321.Her available credit on this card is $4,679.What is her credit line on this card?

Question 24

Arnold purchased a $1,300 set of golf clubs on a nine-month layaway plan and had to pay a monthly payment of $158.89.What is the fee charged for the layaway plan?

Question 25

Trey is taking out a loan for $85,000.It is a 20-year loan with an APR of 5.85% What will his monthly payment be?

Question 26

Jamal is going to borrow $14,000 from his credit union to buy a used car.The APR is 7.0% and the length of the loan is 4 years.How much will Jamal pay in interest?

Question 27

Loretta was on vacation when her wallet was stolen.By the time she reported her three credit cards missing,the criminal had charged over $10,000 on each card.How much of this will Loretta have to pay?

Question 28

Rick carries a balance on his credit card each month.Today is the first day of the new,28-day billing cycle.The current balance is $2,360 and the APR is 21%.Rick is buying a friend an expensive gift that costs $1,500 that he plans to put on his credit card.This will be his only purchase this month.How much in finance charges can he save by making the purchase on the last day of the billing cycle versus the first day of the billing cycle?

Question 29

Garth had unexpected expenses this month and didn't have enough in his saving account to pay the rent of $600.He went to Loanshark Larry's to borrow the money until his next paycheck 15 days from now.Larry charges $100 interest for the 15 days.What is the APR for this payday loan?

Question 30

According to the credit calendar below,what is the average daily balance?
​

Question 31

Yoshi carries a balance on her credit card each month.In May,she decides she wants to use her card to buy a new dishwasher.In which part of the billing cycle should she make her purchase to keep her finance charges to the minimum?

Question 32

Cedric purchased a new refrigerator and stove at Home Depot for $3,729 on a deferred payment plan with no down payment and no payment at all for six months.If the entire $3,729 is paid in full before three months is up,there is no interest.If it is not paid in full within the six months,there is a finance charge with an APR of 25.4% applied each month going back to the first month.If Cedric makes the full payment a week after the six months expired,what is the finance charge?

Question 33

Miriam and Dave want to borrow $25,000 to put an addition on their house.They went over their budget,and they can afford to pay $450 a month.If the bank offers them a home improvement loan with an APR of 6.3%,what should the length of the loan be so they can afford the monthly payments?

Question 34

Jim wants to buy a computer.The total cost is $1,180.If he can save $60 a month,how long will it take for him to save up for the computer?

Question 35

Rhett is about to begin college and has received a 10-year $7,500 Federal Direct Unsubsidized Loan with an interest rate of 6.4%.He will be required to begin making payments six months after graduation.If Rhett decides to capitalize the interest accrued from the time he receives the funds until he begins making payment,how much total interest would he pay on this loan?

Question 36

How does a credit card company calculate finance charges on a credit card?

Question 37

Shania bought a $1,972 drum set on the installment plan.The installment agreement included a 20% down payment and 36 monthly payments of $52.04 each.What is the finance charge?

Question 38

George wants to borrow $30,000 to purchase a car.After looking at a monthly budget he realizes that all he can afford to pay per month is $350.The dealership is offering a 4.77% loan.When George hears how much interest he will pay over the life of the loan,he decides to cut back on his entertainment expenses and pay $400 per month.How much in interest will George save by paying an extra $50 per month? Hint: Round any loan length calculations to the nearest quarter of a year.