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Personal Finance: Student and Consumer Loans
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What Is Consumer Debt?

Consumer debt consists of personal debts that are owed as a result of purchasing goods that are used for individual or household consumption. Credit card debt, student loans, auto loans, mortgages, and payday loans are all examples of consumer debt.
 

Personal Finance: Student and Consumer Loans
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25 Questions

1. Debt consolidation loans are very appealing because
2. Under a Federal Direct Loan, you don't begin making payments until six months after graduation.
3. Defaulting on a secured loan may lead to the collateral being repossessed.
4. Consumer loans are less formal than credit cards and/or other open credit.
5. A short-term loan that provides funding until a longer-term loan can be secured is called a(n)
6. A ________ is tied to a market interest rate, such as the prime rate or the six -month Treasury bill rate.
7. Student loans are a smart source of financing for school because you only pay part of the interest charges and the rest is subsidized by the lender.
8. The finance charges for a loan may include
9. Alice has fallen behind on her signature loan- She recently received a notice from the lender that her wages were going to be garnished to pay off the debt- What is the loan clause that allows the lender to take this action against Alice because she was in default?
10. What is the loan clause stating that if you default on a secured loan, the lender can repossess whatever is secured, as well as bill you for the difference if that repossession does not cover what you owe?
11. Which of the following statements would most correctly complete the following sentence? As the interest rate on a loan increases
12. The 28/36 rule says that as long as your total debt payments are under 36 percent of your gross income then you are not overextended.
13. Variable-rate loans tied to long-term rates expose you to more risk of rate changes than variable-rate loans tied to short-term rates.
14. If your before-tax cost of a home equity loan is 12 percent and you are in the 30 percent marginal tax bracket, your after-tax cost of the home equity loan is 9 percent.
15. Which of the following characterize secured loans?
16. Amortization refers to the process in which a large proportion of the early payments of an installment loan goes to cover interest, and the later payments have a larger proportion going towards the payment of principal.
17. If you own a home with a market value of $175,000 and you have an outstanding balance on your mortgage of $60,000, your home equity is
18. You are considering a home equity loan- Your marginal tax bracket is 25%- You want to borrow $30,000 and are quoted an APR of 10%- How much money would you save in taxes each year if you use the tax-deductible home equity loan?
19. Unsecured loans are generally less risky to lenders than secured loans- Therefore secured loans typically charge a higher APR than unsecured loans.
20. What can a couple seeking to get out of debt do?
21. Which statement is true regarding direct unsubsidized loans?
22. The loan contract is a formal document called a(n) ________ and may contain a(n) ________ specifying who retains control over the item being purchased in the case of default.
23. What will the courts do if you file Chapter 7 personal bankruptcy?
24. A simple interest installment loan calculates interest on the unpaid balance- An add -on
25. Student loans are loans with federally subsidized interest rates given, based on financial need, to students making satisfactory progress in their degree programs.

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