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Exam 7: Credit Cards and Consumer Loans

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Question 21

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Vickie wants to borrow $5,000 for three years.She will repay the $5,000 plus the finance charges in one lump sum at the end of the three-year period.If the lender charges her 12 percent add-on interest,how much will Vickie pay in finance charges?

A) $600
B) $1,800
C) $6,800
D) $5,600

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Question 22

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A borrower who has failed to make a payment of principal or interest when due or meet any other requirement of a credit agreement is said to be in foreclosure.

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Question 23

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The rule of 78s is a commonly used method of calculating the

A secured loan requires

The contract supporting an installment loan is called a(n)

Annual and transaction fees are not required to be included in the APR calculation for a credit card because they cannot be known in advance.

The outstanding balance owed on a debt is the

The FCBA helps people who wish to dispute billing errors on revolving credit accounts.

Which type of credit card is issued through retail sellers and businesses?

With declining-balance loans,there are no prepayment penalties.

The cost of credit on a yearly basis as a percentage rate is called the APR.

An unsecured personal loan is a line of credit available on an as-needed basis.

Which of the following is not an example of an open-end credit account?

An installment purchase agreement provides a measure of protection for

Your goal should be to use credit cards in a manner that avoids all fees,including finance charges.This means paying at least the minimum payment every month.

The contract supporting a credit card account is called a(n)

Almost all installment loan contracts contain an acceleration clause stating that after a specific number of payments are unpaid,the loan is in default,and all remaining installments are due and payable on demand of the creditor.

A requirement of the federal Truth in Lending Act (TIL) requires that all installment loan lenders disclose to credit applicants

An installment loan is also called open-end credit.

When a person makes a purchase on credit with no cash passing between the borrower and the lender,this is called a cash loan.