Installment loans for purchasing furniture or appliances

Reference no: EM13749291

Question 1: Examples of _____ include automobile and installment loans for purchasing furniture or appliances.

a line of credit
a credit card loan
open-end credit
closed-end credit
convenience credit

Question 2: A creditor may set a maximum amount of credit that a person is allowed, and this is called a(n)

revolving credit.
line of credit.
convenience credit.
installment cash credit.
single lump-sum credit.

Question 3: If your monthly net (after-tax) income is $2,200, what should be your maximum amount spent on credit payments?

$150
$220
$440
$500
$660

Question 4: Which one of these items can be included in your credit report?

Race
Marital status
Sex
Nationality
Religion

Question 5: In determining your credit capacity, you first provide for basic necessities, such as

furniture.
home furnishings.
mortgage or rent.
automobiles.
durable goods.

Question 6: Personal bankruptcy can be reported to credit bureaus for _____ years.

Question 7: If a bank needs to examine the value of a specific asset when you are applying for a loan, this process refers to which aspect of the five Cs of lending?

Character
Capacity
Collateral
Capital
Conditions

Question 8: When a lender analyzes a borrower's assets or net worth, this is called

Capacity.
Character.
Capital.
Collateral.
Conditions.

Question 9: The first step you should take if you are denied credit is to

increase your income and decrease your spending.
check your credit file at the consumer bureau.
hire an attorney and file a suit against the creditor.
reapply for credit.
sue the credit bureau that provided the negative information.

Question 10: Which one of the selections can be categorized as a disadvantage of credit?

The use of credit can allow you to receive advance notice of sales.
The use of credit can allow for you to purchase previously inaccessible items.
The use of credit allows for the purchase of goods even when funds are low.
The use of credit can allow for the easier return of merchandise.
The use of credit can lead to overspending.

Question 11: One of the following financing methods typically provides individuals with a float period. Which one of these methods has this as an option?

Installment loan
A loan from a relative
Lump sum loan
Home equity line of credit
Credit card

Question 12: While collateralized loans may provide lower interest rates, these loans have a disadvantage because

the loan must be repaid in a short period of time.
you ruin your credit rating.
the loan is difficult to obtain.
commercial banks do not make such loans.
the assets used as collateral are tied up until the loan has been repaid.

Question 13: One source of the most expensive loans is through

parents.
finance companies.
banks.
friends.
credit unions.

Question 14: Which one of the following is a signal of a potential debt problem?

Paying the maximum balance due each month
Borrowing money to pay old debts
Using savings to pay for major purchases
Receiving notice of prompt payment from creditors
Occasionally working overtime and moonlighting

Question 15: If a debtor files for Chapter 7, he or she is

absolved of alimony and child support payments.
not required to pay a filing fee.
not called bankrupt.
required to draw up a petition listing all assets and liabilities.
exempt from the repayment of educational loans.

Question 16: Jerry Dean starts the month with a balance of $1,500 on his credit card. On the 10th day of the month, he purchases $200 in clothes with his credit card. On the 15th day of the month, he makes a payment on his credit card of $500. The average daily balance for the month including the new purchase is $883. The average daily balance for the month excluding the new purchase is $750. Jerry's interest rate is 1.5% for the month. Jerry's bank calculates the finance charge on the credit card by using the previous balance method. What would Jerry's finance charges be for the month?

$7.50
$13.25
$15.00
$22.50
$18.00

Question 17: Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month. Under the rule of 78s, what is the amount of interest included in her first payment?

$16.00
$4.87
$8.96
$14.77
$1.23

Question 18: Over time, which method of payment is likely to be the least expensive?

Bank credit card
Check written on a home equity line of credit (HELOC)
Store credit card
Cash
A title loan

Question 19: Payday, cash advance, check advance, and post-dated checks are _____ loans.

inexpensive
medium-priced
expensive
low APR
variable APR

Question 20: If Marjorie Wilcox borrows $200 for 1 year with an APR of 12% and an annual service fee of $10, what is her total cost of credit?

Reference no: EM13749291

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