Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
104. (p. 229) Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments
of $258 per month. Under the rule of 78s, what is the amount of interest included in her first
payment?
105. (p. 234) Sarah Parker’s husband goes out with the ‘boys’ for a night on the town and gets
home at 4 am waking everyone in the house. In response, Sarah goes out the next day and
spends $500 in new clothes for herself putting it all on her credit card. Which one of the
answers best explains Sarah’s spending?
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
106. (p. 234) Jeff Bloom wants to have a house just like the one his parents had when he was a
teenager. He finds the house he wants and gets an interest-only loan on it for the first five
years. Which one of the answers best explains Jeff’s spending?
107. (p. 234) Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in
the driveway. Even though his current car is fine, Gary decides that he needs a new car and
goes out and purchases a Hummer with a six-year loan. Which one of the answers best
explains Gary’s spending?
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
108. (p. 234) Steve Black has two children. He is buying each of them their own TV to put in
their rooms so they do not have to join the rest of the family and watch TV together. Which
one of the answers best explains Gary’s spending?
109. (p. 224) Which one of these methods is the fairest of calculating interest?
110. (p. 213) Which method of payment is likely to be the least expensive in the long run?
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
111. (p. 214) Payday, cash advance, check advance, and post- dated checks are _________
loans.
112. (p. 215) The average U.S. household has ______ credit cards.
113. (p. 214) If a new-car loan costs 6%, a used-car loan would cost approximately ___ percent.
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
114. (p. 215) _____________ families rely heaviest on student loans to finance college.
115. (p. 217) In order for a student to apply for financial aid, a student must file an annual:
116. (p. 217) As a result of the recently passed Health Care and Education Reconciliation Act,
federal student loans come directly from:
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
117. (p. 219) If Marjorie Wilcox borrows $200 for one year with an APR of 12% and an annual
service fee of $10, what is her total cost of credit?
118. (p. 225-226) You just received your credit card statement. Which of the following are
included on that statement?
119. (p. 229) The Rule of 78s demonstrates that a borrower pays:
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
120. (p. 213-215) What are the major sources of consumer credit?
121. (p. 219-220) What are two key concepts to keep in mind as you shop for credit?
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
122. (p. 222-224) What are the various methods used to calculate interest?
123. (p. 228) Explain the Rule of 78s.
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
124. (p. 224) In open-end credit, what are the various systems creditors use to calculate the
balance on which they assess finance charges?
125. (p. 224) What can you do if you are unable to meet your credit obligations?
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
126. (p. 707) Explain the concept of “float.”
127. (p. 216) Explain simple interest.
Chapter 07 – Choosing a Source of Credit: The Costs of Credit Alternatives
128. (p. 215-216) In what ways can you lower the risk to your lender in order to reduce your
borrowing costs?
129. (p. 239) Explain choices available in declaring bankruptcy.