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Exam 7: Using Consumer Loans

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Question 71

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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. -You must be a member of a [credit union | S&L] in order to borrow money there.

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verified

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Question 72

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Credit unions lend money to qualified people who are

A) employees.
B) members.
C) previous borrowers.
D) policyholders.
E) stockholders.

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verified

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Question 73

Multiple Choice

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A legal claim that allows creditors to liquidate loan collateral is a

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. -Almost half of all consumer loans are made by [commercial banks | finance companies].

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

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 lower than the interest rate on a loan,it is less expensive to [borrow | use savings] to make a purchase.

A chattel mortgage is a legal claim that gives lenders the right to liquidate specific personal property to satisfy their claims in the event of default.

To qualify for a Stafford loan,you must

Sometimes it may be better to use savings rather than borrow to make a purchase.This would be recommended when

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

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 longer the loan maturity,the [lower | higher] the total finance costs will be.

You want to borrow $1,000 at an interest rate of 10%.The most expensive method of calculating the dollar cost of the interest on this installment loan will be the

Annual percentage rate is equivalent to

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 in accrues,if Bob dies before the debt is repaid his beneficiary will receive

____ loans do not have to be repaid until after you graduate from college.

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].

Cash value loans are available from all types of life insurance policies.

Life insurance loans are income tax-free.

The most common use of consumer loans are to purchase automobiles.

Savings and loan associations dominate the consumer loan market.