Week 4 Quiz Flashcards
T/F: Consumer loans, like open account credit, result from a rather informal process.
False
T/F: From a financial planning perspective, you need not worry about the size of monthly payments when taking a loan.
False
T/F: Ideally, you should take inventory of the consumer debt you have outstanding once a year.
False
T/F: It is legal for a lender to charge a prepayment penalty.
True
T/F: When the interest rate on savings is lower than the interest rate on a loan, it is less expensive to use your savings to make a purchase.
True
The most common use of consumer loans is to finance:
a new vehicle
What kind of loan is repaid in a series of fixed, scheduled payments rather than in a lump sum?
installment
Credit unions lend money to qualified people who are their:
members
It is not advisable to borrow from:
relatives
You are borrowing $5,000 at a 9% interest rate. The total finance cost will be the highest in a:
48-month repayment plan.
If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan, the amount to be:
repaid is $1,900.80.
It is better to use your savings instead of borrowing to make a purchase when:
the cost of borrowing is much greater than the interest earned on savings.
Jamil is purchasing a new truck for $30,000. He is making a $2,000 down payment and will be making 60 monthly payments of $541 each. What are the total finance charges on this loan?
$4,460
