pfin test 2
Credit unions are
Member owned financial cooperatives
An example of an open account credit would be a bank debit card or credit card
credit card
Depreciation or amortization is the loss of the value in an asset such as an automobile that occurs over its period of ownership
depreciation
Consolidation loans are generally inexpensive or expensive
expensive
Using credit is the ideal way to provide for financial emergencies
false
You can stop payment when you purchase an item with your debit card
false
Credit unions are more likely to being paying higher or lower interest on their accounts than commercial bank
higher
The decision whether to grant you credit will be made by individual creditors or credit bureaus
individual creditors
Homeowners may be able to deduct mortgage principle or interest
interest
Having some type of overdraft protection with your bank will end up costing more or less than having a check bounce
less
It would make sense to purchase a vehicle at the end of a close ended lease if the residual value was more or less than the car's market value
less
Lessor or leasee is another term for landlord
lessor
A person who pays off their credit balance every month should look for a credit card with low interest rate or no annual fee
no annual fee
An improper use of extended credit would be to buy a car or non-durable goods
non-durable goods
Low interest rates that have persisted since the financial crisis have been a net benefit to people borrowing money or retired people
people borrowing money
Borrowing from relatives is highly or seldom recommended from financial advisors
seldom
A close ended automobile lease is the most popular type of lease
true
A loan to value ratio of 80% would require a buyer to make a 20% down payment
true
As a homeowner, the federal government may allow you to deduct interest expenses and taxes paid on property
true
Automobiles tend to decrease in value over time
true
Bank credit card cash advances will begin accruing interest charges immediately
true
Collateral is an item of value used to secure the principle portion of a loan
true
Consumer loans are most commonly used to maintain durable goods
true
Credit union members are expected to have some common bond
true
Credit unions grant loans only to members of the credit union
true
Having a range and fully repaid small loan should help improve your credit worthiness
true
One could expect to earn higher rate of interest on a certificate of deposit than a checking account
true
The FDIC insures depositors funds up to $250,000 at member banks under the same depositors name
true
The largest single investment you will undertake in your lifetime will probably be the purchase of a house
true
The purpose of a credit report is to evaluate the kind of risk you oppose to the lender
true
When buying a used car, it is very important to have it checked out by a reputable mechanic
true
Most creditors will or will not be willing to work something out with you if you're having difficulty meeting your payments
will
As a percentage of a take home pay, monthly consumer credit payments should not exceed what
20%
The first step in the auto buying process should be
Analyze how much you can afford to spend on a car
What are the 5 c's of credit and their definitions?
Character A key factor in defining the borrower's willingness to live up to the terms of a loan Capacity The ability of the borrower to service the loan in a timely fashion Collateral Something of values that's used to secure a loan and that the lender can claim in case of default Capital The amount of unencumbered assets owned by the borrower used as another indicator of the borrower's ability to repay the loan Condition The extent to which prevailing economic conditions affect the borrower's ability to service loan
The key to credit worthiness to keep your debt safety ratio as high as possible
False, keep it below 20%
Commercial banks are insured by FDIC
Federal Deposit Insurance Incorporation
To establish credit worthiness, you should first do what
Start a checking and savings account
Sometimes it may be better to use savings rather than borrowing to make a purchase, this would be recommended when
The cost of borrowing is greater than the interest earn on the savings
An important rule for establishing a savings plan is what
all of the above
Researching used car prices, you can check one of the popular car guides
all of the above
The most popular use of consumer loans is to do what
car loans
•An investor would typically expect to receive higher interest rates on a certificate of deposit or treasury bills
certificate of deposit
A checking or savings account is called a demand deposit account
checking
With a close ended or open ended lease, you turn in the car at the end of the term and have no additional financial obligation as a result of the residual value
close ended
The best loan rates for consumer loans are usually from savings and loan associations or consumer finance companies (if you qualify)
consumer finance companies
