Personal Finance Chapter 6

Aman is attending school and had a financial emergency. He contacted his school's financial aid office and asked about a subsidized student loan. Aman's school facilitates these loans and determined that Aman qualifies for a $520 loan. Aman is able to repay the loan over the next 12 months while he is still in school. How much interest will Aman pay on this loan? $0 because interest on subsidized loans does not accrue until Aman stops attending school. $26.00 because the interest rate is 5%. $13.00 because Aman has been making payments on the loan. None of the choices are correct.

a

Which of the following is an illegal lease clause? Requiring you to pay for normal wear and tear. Forbidding you to have a pet. Forbidding you to have a roommate. Requiring you to pay an early lease termination fee.

a

Ann is thinking about paying points to a lender to obtain a lower interest rate on her mortgage. The loan is in the amount of $ 320000. If she pays 2 points, she can reduce the interest rate from 5.40% to 4.70%. How much in loan points must Ann pay to get this deal? $ 1600. $ 6400. $ 3200. $ 800.

b

Collateral is: only required if a credit score is not high enough. property that can be taken by the lender if a loan is unpaid. used with unsecured loans. required for all personal loans.

b

How much can Jorge afford to spend on a monthly car payment if his excess monthly cash flow is $ 470, and he expects the following monthly expenses: $ 48 gas, $ 100 insurance, and $ 12 for maintenance and repairs? $ 66. $ 310. $ 470. There is not enough information available to answer this question.

b

Insurance that protects the lender in the event that the borrower does not repay the mortgage is called: homeowners' insurance. mortgage insurance. settlement insurance. good faith insurance.

b

Someone who guarantees that a renter will either pay the rent on time or make the payment for the renter is called a: reletter. co-signer. tenant. roommate.

b

What is the APR for a loan that charges 3.3% every 30-day payment period? 1.12% APR. 40.15% APR. 0.91% APR. 1.00% APR.

b

Federal student loans offer which of the following advantages? I.No credit check.II.Lower interest rate.III.Flexible loan repayment. I only. I and III only. I, II, and III. II and III only.

c

Izzy just received a credit card offer in the mail. The credit card has an APR of 18.48%. What is the monthly interest rate that will apply to any unpaid balances on this credit card? Assume 12 equal months. 0.92%. 1.85%. 1.54%. 18.48%.

c

Money paid in advance to cover the cost of excess damage you might cause while renting is called a(n): renters' insurance. reletting fee. security deposit. application deposit.

c

Which of the following forms of federal financial aid must be repaid once the student is no longer attending school? Work-study awards. Grants. Direct subsidized loans. None of the choices are correct.

c

With an installment loan, the borrower: is told how much she or he can potentially borrow, and then using a debit card or checkbook, the borrower can access the money and repay the loan and interest through flexible repayments. can receive a short-term loan from a bank or credit union by pledging an upcoming automatic account deposit, such as apaycheck, as repayment of the loan and fees. receives the full amount of money upfront and then makes regular payments to repay the loan and interest. can borrow up to a maximum of $100,000.

c

Aside from not taking out student loans, the best way to minimize the amount of interest paid on student loans is to: limit borrowing to direct subsidized loans. consolidate loans. repay them as quickly as possible. both repay them as quickly as possible and limit borrowing to direct subsidized loans.

d

Emily owns a house with a fair market value of $ 189000. When she purchased the home she paid $ 215000, but that was several years ago. She currently owes $ 198000. How much equity has Emily built since she first purchased the house? $ 56000. $ 26000. -$ 56000. -$ 9000.

d

Peer-to-peer lending options: facilitate loans between groups of individual investors and individual borrowers. provide competitive loan terms to borrowers that do not have access to conventional loans. are accessed through the Internet and require a borrower to have a credit report. All of the choices are correct.

d

Some individuals facing financial emergencies will attempt to skip certain payments to make other payments. This strategy is generally not helpful because: The individual's credit report and credit score will be adversely affected. If income does not increase or expenses do not decrease, then nothing will change in the long run. This will likely lead to higher borrowing costs in the future. All of the choices are correct.

d

Unlike renters, homeowners are required to pay for what common expenses? Replacing appliances. Fixing broken windows. Painting every few years. All of the choices are correct.

d

When searching for a vehicle to purchase, which of the following variables is an important factor in the purchase decision-making process? Reliability. Safety. Cost efficiency. All of the choices are correct.

d

Which of the following types of federal student loans accrues interest (i.e., adds the interest to the loan balance) or allows the student to pay the interest while still in school? Direct subsidized loan. Direct unsubsidized loan. Direct PLUS loan. Both direct unsubsidized and PLUS loans.

d