Personal Finance Chapter 5-7

The Consumer Credit Counseling Service does what?

Aids families with serious debt problems by helping them to manage their money better and set up realistic budget

What should a home buyer consider when evaluating a house?

All: Location of business and future construction projects, zoning laws, property values of community, and school system

When Nancy buys her house, the mortgage company will usually conduct an ____

Appraisal ( which is what you get before getting a mortgage because the bank will need to see how much the house is worth before hand)

What step can you take when your credit application is denied?

Ask the reasons why you were denied credit

What is a disadvantage of a car lease?

At the end of the lease, you have no ownership interest in the vehicle

A loan officer is examining whether or not to offer you a loan today. Specifically, she is examining your income and debts. Which of the five C's of credit is the loan officer reviewing?

Capacity

The question " What are your assets and net worth" relates to

Capital

Personal bankruptcy can be filed under which sections of the U.S. bankruptcy code?

Chapter 7 and 13

The question "Will you repay the loan?" relates to

Character

Sally has a major problem with a product and thinks that many others have had the same problem. What is the best way to solve this?

Class action lawsuit

The use of property or savings to secure a loan relates to

Collateral

The largest fixed expense associated with a new automobile is

Depreciation

Frank and Diane wan to buy a house. What do they need BEFORE they purchase a house?

Down payment

Pauline just submitted an offer on her dream house. As evidence of good faith, she also included

Earnest money (and a counteroffer)

Paul is looking for low-interest, low down payment loan for his first home, but he is not a veteran. He might be eligible for what type of loan?

FHA loan (which is a Federal Housing Administration loan)

What is NOT a major credit bureau?

FICO

What act set procedures for promptly correcting billing mistakes, refusing to make credit car payments on defective goods, and promptly correcting payments?

Fair Credit Billing Act of 1975

T or F. A trade-off of using credit is that it increases the amount of money that will be available to spend in the future

False

T or F. Abigail checked out brands and prices of blue jeans at several stores. She was impulse shopping

False

T or F. Consumer credit dates back to colonial times where farmers came to use it extensively

False

T or F. Consumer credit refers to the use of debit cards for personal needs

False

T or F. FICO is a better score to use than VantageScore for consumers with limited credit histories

False

T or F. Many people use credit to live within their means

False

T or F. Most low- and middle-income people can qualify for a VA-guaranteed loan

False

T or F. Prices at the local convenience store will probably be lower than at the national retail grocery store

False

T or F. The higher your FICO score, the more risk you pose to creditors

False

T or F. Thomas bought a vehicle from a used car dealer. He returned it to the dealer because the transmission fell out 150 miles after he purchased it. The dealer refused to accept the return because the vehicle was sold "as is." This is an example of a limited warranty.

False

T or F. When Brett's apartment lease ends, he should receive his entire security deposit back even though the carpet has been damaged while he was living there

False

T or F. The purpose of an escrow account is to pay the points at closing

False, Escrow is to pay taxes and insurance on top of your house mortgage

T or F. A personal bankruptcy remains on a credit file for no more than five years

False. Most are 7, bankruptcy lasts 10 years

If your identity has been stolen, what does the Federal Trade Commission recommend you to do?

File a police report

Paul bought some bad gasoline that damaged the gas tank of his vehicle. What should he do?

He should provide the gas station with documentation of his purchase and all repair costs

Heidi plans to purchase a pickup truck. The range available for negotiation is the difference between the sticker price and the ....

Invoice price

What is true about the lemon law?

It applies to vehicles that have been serviced four times to correct the same problem in the first 12,000 miles

What is NOT a benefit of home ownership?

Maintenance and costs of repairs and home improvements

Home Equity loans should be used for

Major expenses such as home improvements or education

The Equal Credit Opportunity Act ( ECOA) prohibits a lender form discriminating based on what?

Nationality, race, age, sex

The lowest payment does not necessarily mean the best credit plan. If your car loan is a long period of time, you may end up owing more than the car is worth. This is called...

Negative Equity

Trenton wants to buy a house but can provide only a 10% down payment. He probably will be required to have...

PMI (which is a private mortgage Insurance)

Rebecca paid extra money to reduce her mortgage interest rate. The extra money is called ...

Points

This expense is NOT covered by a tenant (renter)

Property taxes

the appearance of a used car can be deceptive. When purchasing a used vehicle, it is a good idea to...

have a trained and trusted mechanic of your choice check out the vehicle

If you miss payments on a home equity loan, what can you lose?

house

Private mortgage insurance...

must be terminated automatically when the homeowner's equity reaches 22% of the property value at the time the mortgage was executed

If you have a problem whose remedy will be between $1,500 and $3,000, the appropriate tool to use would be a

small claims court

The amount printed on a label with the suggested retail price that is posted on the vehicle is called

the sticker price

If you are denied credit,

your are entitled to a free copy of your credit report

The unit price of a 64-ounce carton of orange juice that costs $3.20 is how much per ounce?

$0.05 per ounce

the average used car costs about ___ less than the average new car

$10,000

Paul borrowed $200 to be repaid in one year. He paid 10% interest and a service charge of $3.00. What is his financial charge?

$23.00

Tanya received a $1,000 loan from the bank for a vacation. This bank is using the simple interest formula for this one-year, 9% loan. What is her total interest?

$90

information about a personal bankruptcy may be reported in your credit file for how long?

10 years

A typical grace period offered by many credit card issuers is how many days?

20-25 days.

If you are denied credit, you can contact the credit bureau and ask for a copy of your credit report. They cannot charge you with a fee as long as you as to see your file in a certain amount of days from the notification. How many days?

60 days

Madeline wants to purchase a larger house. However, she has not yet sold her current home. She may want to include what in her offer?

A contingency clause (which is what binds the sales contract for both parties)

A legal document that includes information about the due date of monthly rent is called:

A lease

Credit files CANNOT include

Race or Nationality

George has never bought a new car before. What is a technique he should use to find the best deal?

Research the dealer cost and begin negotiations from that point

A vehicle lease has several costs. What is the expected value at the end of the lease?

Residual Value

What is a disadvantage of renting?

Tenants cannot take tax deductions for mortgage interest and property taxes

This is NOT a credit protection law

The credit lawsuit act

Sam is comparing the cost of two loans. One is due in one year and the other is due in four years. Both have the same state rate of interest. What is true?

The interest charges for the one-year loan will be lower than the interest charges for the four-year loan

What is a line of credit?

The maximum dollar amount for credit the lender has made available to a borrower

Home Equity loans have what?

They have interest that is tax-deductible

T or F. A handyman's special is a home that needs work and that you are able to get at a lower price

True

T or F. A lease for a car is typically for three to five years

True

T or F. A legal aid society is one of a network of publicly supported community law offices that provide legal assistance to people who cannot afford their own attorney

True

T or F. Advantages of a lease over a purchase include the buyer can usually obtain a more expensive vehicle and the monthly lease payments are usually lower than monthly financing payments

True

T or F. After two or three years of making loan payments on a new car, the balance owed is greater than the value of the car, which is a situation referred to as upside-down

True

T or F. Angela wanted to rent an apartment, so her landlord required her to sign a lease. The lease is a legal document that defines the conditions of her rental agreement

True

T or F. Lenny the landlord has the right to take legal action against Tina the tenant for nonpayment of rent or destruction of property

True

T or F. Renter's insurance protects the tenant by covering damage or theft to clothing, furniture, and stereo equipment

True

T or F. The largest fixed expense associated with a new automobile is depreciation

True

T or F. When used effectively, credit can help a consumer have more and enjoy more

True

T or F. Your lifestyle affects your housing decision

True

what is the best scoring technique used in credit applications for consumers with limited credit histories?

VantageScore

Which is NOT a warning sign of debt problems

You pay your credit card bills in full each period

What is the ONLY online source authorized to provide you with a free copy of your credit report annually?

annualcreditreport.com

Steven needs to write a will. His best resource is an

attorney