HUMS 202 TEST 2

When you apply for credit, the lender will review the "Four C's" to decide whether you are a good credit risk, or in other words, whether you are likely to pay back the loan. Which of the following is NOT one of the "Four C's"?

Clarity (are you mentally stable enough to manage your own finances)

Which of the following is NOT true about credit?

Credit is extra money.

The interest rate is more important to consider than the annual percentage rate (APR) when shopping for a loan.

False

Most loans require you to offer the bank some form of collateral. Which of the following cannot be used as collateral?

Furniture

Which of the following is NOT true about interest on a loan?

Interest is the amount of money the bank pays you so you can use its money.

When considering applying for some form of credit and reviewing various Disclosure Statements, which of the following questions is typically NOT a part of that consideration?

Is Overdraft Protection offered?

Which of the following is NOT true of Rent-to-Own credit services?

The item belongs to you while you make the payments, and if you miss a payment, you can get back the money you've already paid by returning the item to the store.

A loan is going to cost you more money than just the price of the items you're buying.

True

Trying to get a loan from a bank is time consuming and invades the privacy of your personal credit history; thus, you'd be better off using alternative credit arrangements such as refund anticipation loans, payday loans, or rent-to-own services.

True

If you are applying for credit, which of the following will NOT give the bank a reason to deny your loan?

You make regular deposits to a savings account.