Chapter 18 Test

The cost of using someone else’s money is called interest.

• True

• False

An installment loan is one in which you agree to make monthly payments in specific amounts over a period of time.

• True

• False

The legal process of reducing or eliminating money owed is bankruptcy.

• True

• False

A person’s reputation for paying bills on time is known as collateral.

• True

• False

Upon request, a creditor must give any person who is denied credit a written statement of the reasons for denial.

• True

• False

The date on which a loan must be repaid is the maturity date.

• True

• False

If you sign a promissory note with a cosigner, the cosigner is responsible for

• making the down payment

• collecting the payment from you

• paying the note if you don't pay as promised

• all the above

A maximum amount you are allowed to owe at one time on your credit account is called the

• charge limit.

• finance charge.

• credit limit.

• installment.

Simple interest =

• P × R

• P × R × T

• P × T

• S × R × T

Which of the following is NOT one of the “three Cs of credit”?

• character

• creativity

• capacity

• capital