fin Flashcards
Sources of personal loans include:
commercial banks, savings institutions, finance companies, and credit unions.
Loan agreements with family and friends should:
Loan agreements with family and friends should:
In the loan application process, the information the borrowers must supply to the lenders is:
a personal balance sheet and a personal cash flow statement.
From the personal cash flow statement, lenders can determine: (Select the best answer below.)
if borrowers have sufficient cash flow to cover their loan payments.
Interest rates are usually: (Select the best answer below.)
lower on secured loans because the lender has less to lose in the event the loan is not repaid.
Loans backed by collateral are called: (Select the best answer below.)
secured loans.
Collateral includes: (Select the best answer below.)
assets used to back a loan in the event that the borrower defaults.
What are your responsibilities if you cosign a loan? What are the potential consequences of failing to live up to your responsibilities as a cosigner?
If you cosign a loan
you can be required to pay the balance of the loan not repaid by the borrower.
If you fail to live up to your responsibilities as a cosigner,:
it may restrict the amount you can borrow
What is the purpose of the annual percentage rate measurement?
The annual percentage rate (APR) measurement:
calculates both interest and other fees on a loan on an annualized basis.
Could lenders with the same interest rate report different APRs?
Yes, depending on the other fees charged.
Simple interest is:
the sum of the principal paid on the loan divided by the loan amount.
Simple interest is measured using the principal,
the interest rate applied to the principal, and the loan’s maturity.
What information is NOT contained in a loan repayment schedule.
A comparison of your interest rate and the current interest rate.
Loan payments under the simple interest method are usually lower than loan payments under the add-on interest method because the: (Select the best answer below.)
interest is calculated on the remaining balance.
Which of the following is not one of the disadvantages of leasing a car? (Select the best answer below.)
Your equity in the car is limited to your lease payments.
Which of the following is a characteristic of a student loan?
The tax benefits are phased out for individuals who are in high tax brackets.
What is home equity? Describe how a home equity loan works.
Home equity is:
the difference between the market value of the home and the debt on the home.
A home equity loan is
a line of credit that allows the homeowner to borrow against the equity in their home.
The two financial components you must consider before purchasing a home are the:
down payment and the monthly mortgage payments.
When determining an affordable down payment, you should consider:
the market value of your assets.
When determining affordable monthly mortgage payments, you should consider
your monthly cash inflows and outflows.
Fixed-rate mortgages offer a fixed rate of interest for
15 or 30 years, and are preferred by many homeowners because their payment is not tied to market interest rates.
An amortization table discloses the monthly mortgage payment based on the:
mortgage amount, a specified fixed interest rate, and a maturity.
Each mortgage payment represents
a portion of payment towards the principal and a portion of payment towards the interest.
An adjustable rate-mortgage contact:
must specify the frequency at which the mortgage rate may adjust.
An umbrella personal liability policy:
An umbrella personal liability policy becomes effective when your auto and homeowner’s policy limits are:
provides additional liability coverage to auto and homeowner’s insurance policies.
Exhausted.
Renter’s Insurance:
Who should consider purchasing renter’s insurance?
protects against damage due to weather, which is ALSO covered by homeowner’s insurance.
provides liability coverage for injury to those who might be hurt on your premises, which may also be specified by homeowner’s insurance.
All renters should purchase renter’s insurance, if only for the liability protection.
Homeowner’s insurance:
cover’s your home and contents, which is not covered by renter’s insurance.
One step you could take to reduce your homeowner’s insurance premium is:
-shop around for insurance.
-install storm shutters.
-improve protection.
-install a security system.
-increase your deductible.
A homeowner’s insurance premium will be higher if:
the deductible is lower
