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