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Exam 7: Using Consumer Loans

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Question 21

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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. -Credit life insurance [is | is not] a good financial deal from the perspective of the borrower.

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Question 22

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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. -The majority of consumer loans are made with [fixed | variable] interest rates.

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Question 23

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A personal,unsecured consumer loan is most frequently used to help borrowers straighten out a critical financial situation.

Annual percentage rate is equivalent to:

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

The highest interest rate installment loans are usually made by:

Installment loans are repaid in monthly payments.

The purchase of credit life insurance is highly recommended by most financial planning experts.

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

To qualify for a Perkins loan,you must:

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.

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. -Using [simple | add-on] interest would be less expensive for the borrower when determining the total to be paid to the lender.

GMAC is an example of a captive finance company.

Rebates are almost always more cost effective than the 0percent APR loan offered on automobile loans.

Loans from life insurance policies are structured so that the interest rate on the loan is set at the time the loan is made.

Credit unions offer some of the most attractive loan terms available.

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. -[Interim financing | Installment loan] is used in situations where the funds to be used for repayment are known to be forthcoming.

Home equity loans are similar to other installment loans except:

When comparing two installment loans with the same principal and APR,the loan with the longer maturity will have the lower monthly payment and the higher total costs.

Credit unions dominate the consumer loan market.