ch 7 pfin – Flashcard
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loans made for specific purposes using formally negotiated contracts that specify the borrowing terms and repayment
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consumer loans
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legal note giving the lender the right to see collateral if the borrower defaults on the obligation
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collateral note
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method of calc. interest by computing finance charges on the original loan balance and then adding the interest to that balance
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add on method
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a doc., which lenders are required to supply borrowers that states both the dollar amnt. of fin. charges and the APR applicable to a loan
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loan disclosure statement
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a mortgage on personal property given as security for the payment of an obligation
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chattel mortgage
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process of paying off a loan by taking out another loan
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loan rollover
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loan that is repaid in a series of fixed scheduled payments rather than a lump sum
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installment loan
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firm that purchases notes drawn up by sellers of certain types of merchandise, typically big ticket items
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sales finance company
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legal claim permitting the lender in case the borrower defaults to liquidate the items serving a collatoeral to satisfy the obligation
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lien
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method of calc. finance charges in which interest is computed and then subtracted from the principal with the remainder being disbursed to the borrower
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discount method
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sales finance company that is owned by a manufacturer of big ticket merch. GMAC is a captive fin. company
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captive finance company
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an accumulation of savings in an insurance policy that can be used as a source of loan collateral
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cash value
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The APR on a single payment loan for 1000 dollars
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13 %
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if the discount method is used to calc. a financial charge of 250.6 on a 24000 t/f
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false
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with the discount method the fin. charges are calculated and then added to the amount borrowed t/f
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false
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sometimes it may be better to use savings rather than borrow to make a purchase. this would be recommmended when
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the cost of borrowing is greater than the interest earned on the savings
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the purchase of credit life insurance is highly recommended by most financial planning experts t/f
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false
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if the add on method is used to calculate a finance charge of 100.8 on a 1800 dollar loan the amount to be repaid would be 1900.8 t/f
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true
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collateral is an item of value used to secure the principal portion of a loan t/f
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true
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a personal consumers loan could be used to
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all
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_____ loans dont have to be repaid until after you graduate from college
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stafford and perkins
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consumer fin. compaines usually charge lower rates of interest than comm. banks t/f
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false
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the highest interest rate installment loans are usually made by
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consumer finance companies
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consumer loans like open account credit result from a rather than informal process t/f
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false
