MM Ch 10 Test Review

Personal loans are typically used for large purchases such as __________.

• cars

• boats

• motorcycles

• all of the above

The fraction of an item's cost that a consumer pays up front is called the __________.

• down payment

• loan amount

• equity conversion

• liability

Personal loans usually mature in __________.

• two weeks

• 24 to 72 months

• 10 to 20 years

• none of the above

Sometimes a creditor may ask for a __________ to sign the loan documents. This person promises to repay the loan if the borrower defaults.

• cosigner

• lienor

• payee

• buyer

By law lenders are required to report the interest rate that factors in all of the relevant loan charges. This interest rate is known as the __________.

• teaser rate

• annual percentage rate

• loan rate

• prime rate

A(n) __________ loan has some asset pledged against it as collateral.

• unsecured

• covered

• teaser

• secured

Loans taken out to purchase a house are commonly called __________.

• subprimes

• teaser loans

• mortgages

• collateral

Loans that allow homeowners to borrow money using the equity in their homes as collateral are __________.

• adjustable rate loans

• mortgage teaser rates

• home equity loans

• illegal

Which of the following is not a reason to rent a home instead of buying one?

• if rent is cheaper

• if you intend to live in the area for only a few months

• if you are not familiar with the local real estate market

• if there are tax advantages to renting

Students with 'exceptional' financial need may be eligible for subsidized loans known as __________, which carry very low interest rates and have longer grace periods than other subsidized student loans.

• Federal Stafford loans

• home equity loans

• Federal Perkins loans

• federal loans