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Exam 7: Using Consumer Loans

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Question 51

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The frequency of longer-term installment loans carrying variable interest rates is increasing.

A) True
B) False

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Question 52

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INSTRUCTIONS: 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 monthly payments will be.

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Question 53

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INSTRUCTIONS: 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 average student debt is about [ $35,000 | $75,000 ].

Only stocks can be used as collateral for personal loans.

Calculate the finance charge and the monthly payment on a $20,000 add-on installment loan with an interest rate of 9% and a term of 5 years. (Show all work.)

Parent Loans for Undergraduate Students (PLUS) loans are made to the parents or legal guardians rather than to the students.

Commercial banks are able to charge lower interest rates than other lending institutions because:

A chattel mortgage is an instrument that gives lenders title to movable personal property in the event of default.

The add-on method is less expensive than the simple interest method when the stated rates of interest are identical.

INSTRUCTIONS: 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. Single-payment loans are [ more | less ] popular than installment loans.

Loan repayment under the Parent Loans for Undergraduate Students (PLUS) program normally begins within _____ of loan disbursement.

Which of the following is a nondepository institution?

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

A loan rollover means that: