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Exam 7: Choosing a Source of Credit: the Costs of Credit Alternatives

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Question 71

Multiple Choice

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If you default on your automobile loan,most automobile financing agreements:

A) require an advance notice be sent to you before your car is repossessed.
B) permit your creditor to repossess your car at any time without notice.
C) permit the federal consumer credit laws to protect your car from being repossessed.
D) allow you to not pay the full balance due on your automobile loan.
E) allow you to pay fifty percent of the balance due on your automobile loan.

F) A) and B)
G) A) and C)

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Question 72

Multiple Choice

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Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in the driveway.Even though his current car is fine,Gary decides that he needs a new car and goes out and purchases a Tundra with a six-year loan.Which one of the following best explains Gary's spending,which can lead to overindebtedness?

A) Misunderstanding or lack of communication
B) The use of money to punish
C) The expectation of instant comfort
D) Keeping up with the Joneses
E) Overindulgence of children

F) B) and C)
G) B) and E)

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Question 73

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After you have selected a product,you should buy it immediately before the store runs out of it.

The rule of 78s formula dictates that you pay less interest at the beginning of a loan.

Jerrod Dean starts the month with a balance on his credit card of $800.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 $300.The bank charges 1.5 percent interest per month using the adjusted balance method (and excludes new purchases) .What would Jerrod's finance charges be for the month?

Which one of the following is often the source of the least expensive loan?

If you want to take advantage of the interest-free period on your credit card,you must pay your bill in full every month.

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Explain simple interest.

Borrowing from credit unions has several advantages but does not include:

List several national nonprofit organizations that provide information and assist people with debt problems by phone and online.

According to a consumer affairs columnist,the nation's number one family financial problem is:

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Which of the following financially supports the Consumer Credit Counseling Service with contributions?

If you declare a Chapter 7 bankruptcy,you do not have to pay alimony,child support,or educational loans.

Explain the concept of "float."

The Rule of 78s dictates that a borrower pays:

Don't make the mistake of trusting which of the following counseling providers that promise to help you clean up your credit report for a fee:

Randy Ice starts the month with a balance on his credit card of $800.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 $300.The average daily balance for the month including the new purchase is $683.The average daily balance for the month excluding the new purchase is $550.The bank charges 1.5 percent per month and uses the average daily balance excluding new purchases method.What would Randy's finance charges be for the month?

If you receive a phone call from a debt collector,s/he must send you a written notice within ________ days.