Unit Four Exam Review

1. Unit Four Exam Review

2. Molly went into the car dealership to purchase a new 2010 automobile. With only $5,000 available from her own funds, she financed the remaining amount through a local financial institution. For the next three years, she will have to pay a monthly payment of $274.65 until the car is paid for. In our discussions, the ability to purchase the car using the financial institution’s money would be an example of……….

3. Molly went into the car dealership to purchase a new 2010 automobile. With only $5,000 available from her own funds, she financed the remaining amount through a local financial institution. For the next three years, she will have to pay a monthly payment of $274.65 until the car is paid for. In our discussions, the ability to purchase the car using the financial institution’s money would be an example of………. CREDIT

4. Molly went into the car dealership to purchase a new 2010 automobile. With only $5,000 available from her own funds, she financed the remaining amount through a local financial institution. For the next three years, she will have to pay a monthly payment of $274.65 until the car is paid for. In our discussions, Molly would be considered the……

5. Molly went into the car dealership to purchase a new 2010 automobile. With only $5,000 available from her own funds, she financed the remaining amount through a local financial institution. For the next three years, she will have to pay a monthly payment of $274.65 until the car is paid for. In our discussions, Molly would be considered the…… DEBTOR

6. Molly went into the car dealership to purchase a new 2010 automobile. With only $5,000 available from her own funds, she financed the remaining amount through a local financial institution. For the next three years, she will have to pay a monthly payment of $274.65 until the car is paid for. In our discussions, the financial institution would be an example of a ________ who has a ______________ in the car until it is paid for (considered a _________ ____________).

7. Molly went into the car dealership to purchase a new 2010 automobile. With only $5,000 available from her own funds, she financed the remaining amount through a local financial institution. For the next three years, she will have to pay a monthly payment of $274.65 until the car is paid for. In our discussions, the financial institution would be an example of a ________ who has a ______________ in the car until it is paid for (considered a _________ ____________). CREDITOR; SECURED INTEREST; SECURED PARTY

8. Ensures that both businesses and consumers are given an equal chance to obtain credit. • Protects people when they deal with any creditor who regularly gives credit. • Illegal to discriminate based on sex, race, marital status, national origin, religion, age, or b/c they get public assistance income. • AND THIS PREVENTS WHAT?

9. Ensures that both businesses and consumers are given an equal chance to obtain credit. • Protects people when they deal with any creditor who regularly gives credit. • Illegal to discriminate based on sex, race, marital status, national origin, religion, age, or b/c they get public assistance income. • AND THIS PREVENTS WHAT? EQUAL CREDIT OPPORTUNITY ACT; PREVENTING CREDIT DISCRIMINATION

10. A Citibank Visa or MasterCard & Discover Card are examples of this type of credit?

11. A Citibank Visa or MasterCard & Discover Card are examples of this type of credit? OPEN-END CREDIT

12. After working for several years as an automobile mechanic, Burk decided to return to college to finish the coursework required for his degree. To finance his education, he arranged a loan from his bank. His mother agreed to cosign the promissory note. His mother would be considered the _________________ in the transaction.

13. After working for several years as an automobile mechanic, Burk decided to return to college to finish the coursework required for his degree. To finance his education, he arranged a loan from his bank. His mother agreed to cosign the promissory note. His mother would be considered the _________________ in the transaction. ACCOMODATION PARTY

14. Part of the Consumer Credit Protection Act (1968), this requires that all creditors (lenders) tell both the Finance Charge and Annual Percentage Rate (APR) – to compare the costs associate with different lenders.

15. Part of the Consumer Credit Protection Act (1968), this requires that all creditors (lenders) tell both the Finance Charge and Annual Percentage Rate (APR) – to compare the costs associate with different lenders. TRUTH IN LENDING ACT

16. If one believes an error has been made on a bill, notify the creditor in writing w/i 60 days of the date on the statement. • Name, Acct. #, charge in ?, why there is an error. • Creditor must acknowledge letter w/i 30 days. • Investigate and explain why it is correct or fix the error w/i 90 days. • May not be held in delinquency for a dispute.

17. If one believes an error has been made on a bill, notify the creditor in writing w/i 60 days of the date on the statement. • Name, Acct. #, charge in ?, why there is an error. • Creditor must acknowledge letter w/i 30 days. • Investigate and explain why it is correct or fix the error w/i 90 days. • May not be held in delinquency for a dispute. FAIR CREDIT BILLING ACT

18. Susan is a senior at a local college and she is completing her paperwork to graduate in May. As part of the graduation process, she must go through an exit interview. At this interview, she is informed that her student loan payments of $500.00 per month will begin in November. If she carries the loan to maturity, she will pay $60,000 in interest – on top of the loan amount. When she finds her first employment opportunity, a portion of her salary will be budgeted to go to the student loan. Which disadvantage of credit is Susan showing by her budgeting a portion of her salary to go to student loans?

19. Susan is a senior at a local college and she is completing her paperwork to graduate in May. As part of the graduation process, she must go through an exit interview. At this interview, she is informed that her student loan payments of $500.00 per month will begin in November. If she carries the loan to maturity, she will pay $60,000 in interest – on top of the loan amount. When she finds her first employment opportunity, a portion of her salary will be budgeted to go to the student loan. Which disadvantage of credit is Susan showing by her budgeting a portion of her salary to go to student loans? FUTURE INCOME IS TIED INTO THE FINANCING

20. Will an individual repay the debt is which of the five Cs?

21. Will an individual repay the debt is which of the five Cs? CHARACTER

22. This three-digit number represents an individual’s credit-worthiness and their perceived ability to repay a debt based on their history; a determinant for the types of interest rates they will receive when applying for financing or a credit card.

23. This three-digit number represents an individual’s credit-worthiness and their perceived ability to repay a debt based on their history; a determinant for the types of interest rates they will receive when applying for financing or a credit card. CREDIT SCORE

24. Evan was traveling home after a long day of work when his car broke down along the highway. After a tow truck was called and his car taken to the designated mechanic, his tire rod broke in half and would have to be replaced. Without his checkbook, he used his Visa card to pay for the repairs. Which advantages of credit is Evan using in this transaction?

25. Evan was traveling home after a long day of work when his car broke down along the highway. After a tow truck was called and his car taken to the designated mechanic, his tire rod broke in half and would have to be replaced. Without his checkbook, he used his Visa card to pay for the repairs. Which advantages of credit is Evan using in this transaction? PROVIDES FOR EMERGENCY FUNDS

26. Sarah receives her paychecks on the fifteenth and thirty of each month. On the 28th, she saw a piece of furniture that she felt would go great with her existing furniture. Unfortunately, it was on sale and the display unit was the last one. Unable to hold the piece for her, she decided to purchase it using her MasterCard because she will have the funds on the 30th to pay for the furniture when her credit bill comes on the 10th. Which advantage of credit is she using with her purchase?

27. Sarah receives her paychecks on the fifteenth and thirty of each month. On the 28th, she saw a piece of furniture that she felt would go great with her existing furniture. Unfortunately, it was on sale and the display unit was the last one. Unable to hold the piece for her, she decided to purchase it using her MasterCard because she will have the funds on the 30th to pay for the furniture when her credit bill comes on the 10th. Which advantage of credit is she using with her purchase? DEFERRED BILLING

28. Agencies, TransUnion – Experian – Equifax to name the “big three” that monitor one’s credit activities and alerts the individual/business about one’s credit history and score.

29. Agencies, TransUnion – Experian – Equifax to name the “big three” that monitor one’s credit activities and alerts the individual/business about one’s credit history and score. CREDIT AGENCIES

30. Is the creditor fully protected if the debtor fails to repay, looking at one’s capital & assets v. liabilities figures represents which of the five Cs?

31. Is the creditor fully protected if the debtor fails to repay, looking at assets v. liabilities figures represents which of the five Cs? CAPITAL

32. Sarah receives her paychecks on the fifteenth and thirty of each month. On the 28th, she saw a piece of furniture that she felt would go great with her existing furniture. Unfortunately, it was on sale and the display unit was the last one. Unable to hold the piece for her, she decided to purchase it using her MasterCard because she will have the funds on the 30th to pay for the furniture when her credit bill comes on the 10th. Which advantage of credit is she using with her purchase?

33. Sarah receives her paychecks on the fifteenth and thirty of each month. On the 28th, she saw a piece of furniture that she felt would go great with her existing furniture. Unfortunately, it was on sale and the display unit was the last one. Unable to hold the piece for her, she decided to purchase it using her MasterCard because she will have the funds on the 30th to pay for the furniture when her credit bill comes on the 10th. Which advantage of credit is she using with her purchase? USE OF FUTURE FUNDS TO PAY FOR THE PURCHASE.

34. Regulation where the following items must be disclosed: • Cash Price, Down Pmt..Trade-In Price • Amount Financed, Finance Charges • APR, Costs (Ins., Filing, Misc.) • Deferred Payment Price • Amounts and Dates of Payment • Description of Security Interest • Method of computing unearned finance charges • Any other applicable information

35. Regulation where the following items must be disclosed: • Cash Price, Down Pmt..Trade-In Price • Amount Financed, Finance Charges • APR, Costs (Ins., Filing, Misc.) • Deferred Payment Price • Amounts and Dates of Payment • Description of Security Interest • Method of computing unearned finance charges • Any other applicable information REGULATION Z

36. Prevents the abused of credit by: • Dealing with unfavorable reports issued by credit bureaus. • You, as the debtor, have a right to know all personal information that is in a consumer reporting agency’s files and the sources of the information. • Also, have a right to know the name of anyone who received a copy of the credit report in the past yr. (2 yr. if it relates to a job app.)

37. Prevents the abused of credit by: • Dealing with unfavorable reports issued by credit bureaus. • You, as the debtor, have a right to know all personal information that is in a consumer reporting agency’s files and the sources of the information. • Also, have a right to know the name of anyone who received a copy of the credit report in the past yr. (2 yr. if it relates to a job app.) FAIR CREDIT REPORTING ACT

38. Susan is a senior at a local college and she is completing her paperwork to graduate in May. As part of the graduation process, she must go through an exit interview. At this interview, she is informed that her student loan payments of $500.00 per month will begin in November. If she carries the loan to maturity, she will pay $60,000 in interest – on top of the loan amount. Which disadvantage of credit is Susan experiencing first hand?

39. Susan is a senior at a local college and she is completing her paperwork to graduate in May. As part of the graduation process, she must go through an exit interview. At this interview, she is informed that her student loan payments of $500.00 per month will begin in November. If she carries the loan to maturity, she will pay $60,000 in interest – on top of the loan amount. Which disadvantage of credit is Susan experiencing first hand? OVERALL VALUE OF FINANCIANG WORTH MORE THAN THE ORIGINAL FINANCING

40. Consumers w/ violence, use obscene language, or contact consumers by telephone @ inconvenient times or places. • Debt collectors are not allowed to impersonate Gov’t officials or attorneys (Fraud), obtain information under false pretenses, or collect more than is legally owed.

41. Consumers w/ violence, use obscene language, or contact consumers by telephone @ inconvenient times or places. • Debt collectors are not allowed to impersonate Gov’t officials or attorneys (Fraud), obtain information under false pretenses, or collect more than is legally owed. FAIR DEBT COLLECTION PRACTICES ACT

42. Personal Loan for $15,000 or a home equity loan for $10,000 are examples of this type of credit?

43. Personal Loan for $15,000 or a home equity loan for $10,000 are examples of this type of credit? CLOSED-END CREDIT