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be the total cost of leasing a vehicle for four (4) years that requires a security deposit of $1,000 (which would be withdrawn from your portfolio, which earns 9% per year), has monthly lease payments of $500, and has a mileage restriction of 20,000 with excess mileage resulting in a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