personal loans
What would be the total cost of leasing a vehicle for four (4) years that requires a security deposit of $1,000 (which would be withdrawn from your portfolio, which earns 9% per year), has monthly lease payments of $500, and has a mileage restriction of 20,000 with excess mileage resulting in a 10 cents per mile charge. Assume over the life of the lease you exceed the mileage limitations by a total of 8,000 miles.
$25,160
You obtain a loan of $3,000 based on simple interest with an annual interest rate of 12 percent, or 1% a month. If the first payment is $300, how much is the principal portion of the payment?
$270
You obtain a loan of $3,000 to be repaid over one year. Assume you are charged 12% interest based on the add-on interest method. Your monthly payments would be
$280
You obtain a loan of $3,000 based on simple interest with an annual interest rate of 12 percent. At the end of the first month, the interest owed on $3,000 is
$30
You have a home with a market value of $200,000. Your total equity in the home is $40,000. The maximum home equity loan available if the bank will loan 80% based on equity invested is
$32,000
Rick needs an advance on his $600 bi-weekly paycheck. He goes to Cash King where he writes them a check for $690 and dates the check two weeks from today. The cost of financing Rick's payday loan is
391%
Loan contract
A contract that specifies the terms of the loan agreed to by the borrower and lender.
Collateral
Assets of a borrower that back a secured loan.
Loan application
Disclosure of information including a balance sheet and cash flow statement.
Simple interest
Interest rate multiplied by the principal.
Maturity
Life or duration of the loan.
Unsecured loan
Loan that is not backed by collateral.
APR
Rate that measures the finance expenses.
When borrowing money from a family member or a friend, the loan agreement should be in writing and signed by all parties to avoid any possible misinterpretations.
True
which methods of calculating interest is the most expensive?
add-on interest
determine monthly payments by adding total int. & principal together & dividing by # of payments
add-on interest method
APR measures finance expenses (interest & all other expenses) on a loan
annualized basis
which is not used as collateral for loan?
clothing
having a longer term loan
costs more interest & so increases the cost of ur loan
good advice to take out maximum student loan for which u qualify
false
leasing a car is good option if u drive many miles a year
false
on an amortization schedule, more interest & less principal is paid each month
false
payday loan costs less than obtaining cash advanced through credit card
false
shopping for auto insurance should begin immediately after you close the deal on the car
false
you should ask for 20% more than u need when taking out a loan
false
collateral is: assets of the lender that backs a secured loan in the event of default
false (lender=borrower)
making extra payments on a loan is all except:
gives u extra income for living expenses
more expensive the car the ___ the payments, the ____u can put away in other investments
higher, less
Which of the following statements about student loans is NOT true?
if you don't complete your education, you will not have to pay back your student loan
over life of loan, the payment to principal ____ & portion to interest expense__
increases, decreases
which is true statement about student loans?
interest payments deferred until students graduate & enter workforce
u could reduce size of monthly payments by
lengthening the maturity
the __ maturity of a loan the ___ the payment:
longer, smaller or shorter,larger
loan repayment schedule, what is amortized refer to?
principal repaid through series of equal payments
agreeing to allow lender to take computer if u fail to make payments-the loan is called
secured loan
all is true regarding cosigner on an account except
the lender may not seize the assets of a cosigner
a loan agreement should be in writing
true
home equity is defined as market value of home less the debt owed on the home
true
interest on home equity loan is deductible from federal income taxes
true
lenders do not like to lend full amount of equity when extending home equity loan
true
loans using add-on interest will have higher payments charges than loans w/ simple interest
true
more $ needed to cover car payment, less u can add to savings
true
one alternative to payday loans is avoid borrowing until u have funds to spend
true
payday loan is short-term loan if u need funds in advance of receiving ur pay check
true
personal financial plan should involve determining the amount of $ you can afford to borrow
true
personal loan is used to finance 1 large purchase
true
proceeds from home equity loan can be used for any purpose
true
receive more favorable terms on a secured loan than on an unsecured loan
true
set limits that increase each year on how much a student can borrow
true
the lender has right to seize a co-signers assets just as if he were the borrower
true
size of monthly payment on loan is dependent an all except:
your age
