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Exam 6: Choosing a Source Credit: the Costs of Credit Alternatives

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Question 21

True/False

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The most commonly purchased type of credit insurance is credit life insurance.

A) True
B) False

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Question 22

Multiple Choice

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Credit counselors will aid families by

A) setting up a budget for them.
B) paying off their loans.
C) providing free basic necessities.
D) providing one month free shelter.
E) relocating them in less expensive areas.

F) B) and D)
G) A) and D)

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Question 23

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Most people who are unable to manage their debts are:

There are no costs involved in filing for a bankruptcy or submitting a consumer proposal.

Which of the following allows a debtor with a regular income to extinguish his or her debts from future earnings or other property over a period of time?

The most expensive loans available are provided by finance companies, retailers, and banks through credit cards.

Your only choice in declaring personal bankruptcy is through an assignment in bankruptcy.

Over-indebtedness is one of the nation's main family financial problems.

The most inexpensive loans available are provided by finance companies, retailers, and banks through credit cards.

The longer the term of the loan the greater the amount of interest charges that must be paid.

Obtaining credit may be easier for people who file a bankruptcy rather than a consumer proposal.

Identify the correct statements. I. Shortening the term of a loan will reduce total interest charges. II. The interest component of each installment loan payment rises over time. III. A credit card holder who pays the minimum balance each month will remain in good standing.

Increasingly, the bankruptcy debtor is likely to be female.

Credit disability insurance can be used when the borrower is unable to pay back a loan in a case of illness or injury.

What are two key concepts to keep in mind as you shop for credit?

Credit life insurance provides for the repayment of the loan if the borrower dies.

Lines of credit usually charge a variable interest rate, tied to the lender's prime rate.

You want to borrow $100 for a year at an annual rate of 8% compounded semi-annually. The effective annual rate of the loan is 8.04 percent.

If you borrow $100 at 12 percent annual interest and repay it in one lump sum at the end of one year, you will have to pay

The Annual Percentage Rate is the percentage cost of credit on a yearly basis.