Personal Finance (Chapter 5)

Joe Chin bought a house for $180,000. He made a 20% down payment. Joe secured a loan for the balance of the purchase price at 6.5% interest for 30 years. What will be the monthly payments on the loan? Use this website (https://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx)

$1,204

How much of what Yoshi pays will be interest?

$1,543.78

Joe Chin bought a house for $180,000. He made a 20% down payment. Joe secured a loan for the balance of the purchase price at 6.5% interest for 15 years. What will be the monthly payments on the loan?

$1,548

How much will she pay in all?

$10,766.17

How much will Charles pay in interest?

$182,484.37

Samantha has a student loan. The loan amount is $15,000 for 10 years. Her interest rate is 8.25% How much will Samantha pay each month? Use this website (https://www.finaid.org/calculators/loanpayments.phtml)

$183.98

Louisa Perez bought a house for $300,000. She made a 10% down payment. Louisa secured a loan for the balance of the purchase price at 5.95% interest for 30 years. What will the monthly payments be?

$2,004

Mary Roberts bought a house for $255,000. She made a 5% down payment. Mary secured a loan for the balance of the purchase price at 6.75% interest for 15 years. What will Mary be paying monthly for her house?

$2,500

How much interest will you pay?

$2,552.87

How much will Ahmed pay in interest?

$2,645.52

What will your monthly payment be?

$257.68

Ahmed wants to get a loan from his credit union for $20,000 to buy a new car. He can get an interest rate of 5% and can pay off the loan in 5 years. How much will Ahmed pay each month?

$377.42

How much will Yoshi pay in all?

$4,243.78

How much of what she pays will be interest?

$4,266.17

How much of what he pays will be interest?

$446.03

Brandon's wallet slips from his jacket pocket in the mall. By the time he realizes his wallet is missing and reports the loss, a thief has used Brandon's credit card to buy a television, a microwave, a DVD player, and other items for a total of $950. Brandon will have to pay

$50

How much will Samantha pay in interest?

$7,077.40

Charles is at a savings bank applying for home mortgage loans. He needs to borrow $150,000. The loan period is 30 years and the interest rate is 6.25%. How much will Charles pay each month?

$923.58

How much will he pay in all?

$946.03

Suppose you are getting a car loan. The car you want to buy costs $16,000. The rate is 5% with a period of 4, 5, or 6 years. You can afford a monthly payment of $275. How long will the loan be? (in years)

6

Yoshi is a college student. He has a credit card balance of $2,700.00. The APR for his credit card is 14.9 percent. His minimum payment is $54.00. (do not use commas or dollar signs in the answers) If Yoshi doesn't charge anything else to his card and makes only the minimum payment, how long will it take him to pay off the $2,700.00 in months?

79 months

Linda has been working full-time for several years. She has a credit card balance of $6,500.00. The annual percentage rate (APR) for her credit card is 15.97 percent. Her minimum payment is $130.00. (do not use commas or dollar signs in the answers) If Linda doesn't charge anything else to her card and makes only the minimum payment, how long will it take her to pay off the $6500.00 in months? (round to the nearest whole month)

83 months

Ramiro is also a college student. He has a credit card balance of $500.00. The APR on his card is 18.24%. His minimum payment is $10.00. (do not use commas or dollar signs in the answers) If Ramiro stops using his credit card, how long will it take him (in months) to pay off the $500.00 if he makes only the minimum payment?

95 months

A loan agreement in which the interest rate, payments, and length of the loan can change over time

Adjustable rate mortgage

Repaying a debt by making regular payments of principal and interest over a set period of time

Amortization

What are the three methods of calculating balance charges on credit cards?

Average Daily Balance Method Adjusted Balance Method Previous Balance Method

A large payment that is much higher than the other regular payments and that must be paid at a set time, such as 5 years after the loan is made.

Balloon payment

A legal procedure to relieve a person who cannot pay debts of those debts or to create a payment plan for paying some of the debts

Bankruptcy

Which of the forms of bankruptcy is known as the wage earner plan?

Chapter 13

This form of resolving a complaint involves a group of people filing a claim?

Class action lawsuit

Expenses a borrower must pay to get a loan, such as recording fees

Closing cost

A person who agrees to pay a loan if the borrower fails to pay

Co-signer

The ability to borrow money with the agreement to pay it back later

Credit

A document that gives a person's credit history and current credit status

Credit Report

The process of getting one loan to pay all other existing debts

Debt consolidation

What services do you NOT need in a credit card?

Disability Insurance Theft Insurance Life Insurance Unemployment Insurance Property Insurance

A court order that pardons a debtor from paying some debts

Discharge

A loan in which equity in a home is used as security for the loan

Equity loan

Property a debtor is allowed to keep in a bankruptcy proceeding

Exemption

Which law gives you the right to know what is in your credit file?

Fair Credit Reporting Act

Which of these laws gives you the right to know what is in your credit file?

Fair Credit Reporting Act

A law that states that debtors cannot be called at certain places, such as work

Fair debt collection practices Act

A legal process for the sale of mortgaged property to repay a mortgage debt is called a repossession.

False

Chapter 7 Bankruptcy is also known as the wage earners plan.

False

Credit for a set amount, such as the cost of a refrigerator, that is paid off in a set period of time is called revolving credit

False

Having multiple late payments does not hurt your credit worthiness

False

Taking a cash advance on your credit card is the same as a purchase with your credit card

False Fees, Higher interest rate, and Payments are applied to the lower-interest balance first leaving you with the higher interest rate of a cash advance.

An interest rate that remains the same each month

Fixed rate

A legal process to force the sale of mortgaged property to repay a mortgage debt

Foreclosure

A proceeding in which a creditor may legally take possession of money or goods held by a third party in payment of a borrower's debt.

Garnishment

The amount of time you have before a credit card company starts charging interest on your new purchases.

Grace period

Which of the following could happen if you exceed your credit limit on your credit card?

Higher Interest Fee Fees for over charging

What type of credit involves a set number of payments at a set dollar amount for a fixed period of time?

Installment Credit

A credit account with a fixed balance that you repay with periodic payments.

Installment credit

If you have an annual fee on a reward credit cards, which of the following could you be paying for?

Insurance options, such as towing Paying for privilege of using a credit card Paying for the cost of using the rewards given

A pre-approved amount that can be borrowed

Line of credit

A loan that is used to secure financing for the purchase of a house

Mortgage

What are characteristics of a Consumer-Friendly card?

No universal defaults No annual fees No balance transfer fees One cycle billing

"Debt through Generations"

Our great grandparents thought debt was a sin. Our grandparents thought it was stupid. Our parents borrowed on a few things. We borrow on everything!

A scam that uses e-mail messages that appear to be from real banks to get account information is called

Phishing

When interest for a credit card is calculated using the outstanding balance at the end of the last billing period, this method is called the

Previous Balance Method

A partial refund of the purchase price of an item

Rebate

A remedy or action taken to seek correction of an error

Recourse

The process of taking an asset that was used for collateral, such as a car, and selling it to pay a debt.

Repossession

A type of credit with which you make payments and continue charging to the account.

Revolving credit

A type of lender that makes loans for purchase of consumer goods such as cards or household appliances

Sales finance company

My car was repossessed when I stopped making payments. This means I had a _______ loan.

Secured

Which type of loan is typically easier to get?

Secured

Consumer Advocacy Groups

Seek to have laws passed that will be beneficial to consumers

The ability to receive services, such as care by a doctor, and pay for them later is called

Service Credit

Use of electricity, water, and other utilities that you will pay for later is an example of this type of credit.

Service Credit

The maximum you are willing to spend for an item

Spending limit

Credit offered through an individual company or merchant.

Store accounts

Which of the following is an example of unsecured loan

Student loan

Debt that is used to finance a student's educational costs

Student loans

A student loan for which interest is paid by the federal government while the borrower attends school at least half-time is called a

Subsidized loan

Sofia is checking her credit card bill. She paid last month's bill in full with a check for $250. However, the current bill shows a payment of only $50. The statement shows her carrying a balance, and finance charges have been applied. Sofia calls the credit card company. They credit the full payment and remove the finance charges. The law that requires creditors to respond in a timely manner to such disputes is:

The Fair Credit Billing Act

Matt discovers two errors in his credit report. The report lists him as still holding a credit card he canceled several years ago. It also does not show that he paid off his car loan. He wants to correct these errors because they could affect the mortgage loan he gets. The law that requires credit bureaus to investigate complaints of inaccurate information in credit reports and to correct or delete it is called

The Fair Credit Reporting Act

A person who agrees to pay a loan if the borrower fails to pay is called a cosigner

True

Banks will consider your income for all adults in the household as part of your credit worthiness.

True

Banks will look at your employment history as part of your credit worthiness

True

When applying for a loan, a bank will consider your payment record on existing debt

True

This law requires that consumers be fully informed about the costs of credit.

Truth-in-Lending Act

Kaylee's refrigerator suddenly breaks down. It's old and would be expensive to repair, so she decides to buy a new one. Kaylee chooses a refrigerator with a 12-month, no-interest financing offer. The sales agreement lists the sale price, the amounts and dates of payments, the APR that will apply if Kaylee doesn't pay off the refrigerator in 12 months, and a lot of other information. The law that requires sellers to provide this information to purchasers is:

Truth-in-lending Act

Unit 5

Using Credit

An interest rate that changes at the discretion of the creditor

Variable rate

The process of spending money electronically rather than using paper checks

Wire transfer