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    Mnitest Chapter 18

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    An Do
    This document discusses various types of consumer loans, credit cards, and real estate lending. It includes a fill-in-the-blank section to test understanding of key concepts like mortgage loans, installment loans, risk-based pricing of loans, and home equity lines of credit. There is also an exercises section with sample calculations for determining loan amounts, monthly payments, interest rates, and total financing charges on different types of consumer loans.

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    © All Rights Reserved
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    Mnitest Chapter 18

    Uploaded by

    An Do
    51 views2 pages
    This document discusses various types of consumer loans, credit cards, and real estate lending. It includes a fill-in-the-blank section to test understanding of key concepts like mortgage loans, installment loans, risk-based pricing of loans, and home equity lines of credit. There is also an exercises section with sample calculations for determining loan amounts, monthly payments, interest rates, and total financing charges on different types of consumer loans.

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    Mnitest chapter 18

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    This document discusses various types of consumer loans, credit cards, and real estate lending. It includes a fill-in-the-blank section to test understanding of key concepts like mortgage loans, installment loans, risk-based pricing of loans, and home equity lines of credit. There is also an exercises section with sample calculations for determining loan amounts, monthly payments, interest rates, and total financing charges on different types of consumer loans.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    51 views2 pages

    Mnitest Chapter 18

    Uploaded by

    An Do
    This document discusses various types of consumer loans, credit cards, and real estate lending. It includes a fill-in-the-blank section to test understanding of key concepts like mortgage loans, installment loans, risk-based pricing of loans, and home equity lines of credit. There is also an exercises section with sample calculations for determining loan amounts, monthly payments, interest rates, and total financing charges on different types of consumer loans.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Chapter 7: CONSUMER LOANS, CREDIT CARDS AND REAL ESTATE LENDING

    Part 1: Filing in the blanks (concepts checking)

    1. The purchase of a house or a multifamily dwelling such as a duplex, triplex or apartment


    building is usually financed through the use of a______________________ loan.
    2. A(n)______________________ loan is a short- or medium-term loan repayable in two or
    more consecutive payments, usually monthly or quarterly.
    3. Household borrowings tend to be ______________________. Consumers are more
    concerned about the size of the debt repayments than the interest rate charged.
    4. _________________ is a method to evaluate a large volume of consumer loans quickly
    with minimum labor. This method is a statistical model which predicts whether the
    consumer will repay the loan or not.
    5. A(n)____________________________________________ is where the customer can
    use the difference between some percentage of the appraised value of their home and the
    mortgage remaining to secure a loan. This loan can be used to fund a college education,
    pay for a vacation or pay for home improvements.
    6. Short-term credit to finance the building of homes or other dwellings is called
    ______________________.
    7. A(n)______________________ is a credit-rating agency that keeps records of borrowers'
    loan payment histories.
    8. _______________________ is the granting of loans to weaker borrowers and charging
    them excessive fees and interest rates, increasing their risk of default
    9. The______________________ is the internal rate of return that equates present value of
    the payments with the amount of the loan. It is the rate required to be reported under the
    Truth in Lending Act.
    10. The interest rate method which requires the interest on the loan to be paid in advance is
    called the______________________ method.
    11. The interest rate method that adds the interest owed to the principal is called the
    __________ method.
    12. The interest rate on most consumer loans is based on the cost of loanable funds to the
    bank plus non-funding cost plus premiums for default and time to maturity and also
    includes the desired profit margin on the loan. This method of pricing loans is known
    as______________________
    13. are loans that families and individuals can draw upon for immediate
    cash needs that are repayable in one lump sum. These loans often cover the cost of a
    vacation, medical care, the purchase of a home appliance or home repairs
    14. Credit cards are the best example of a that offer consumers
    convenience and flexibility. Consumers can access them whenever the need arises.
    15. In the case of a borrower without a credit record or a very poor track record,
    a may be requested to support repayment. Technically if the
    borrower defaults on the payment, they are obligated to repay the loan.

    Part 2: Exercises

    1. A customer seeks a $150,000 home mortgage. The bank requires the customer to pay 1 ¾
    points up front. How much of the loan is actually available to the customer?
    2. A customer wants to borrow $1200 from Edmond State Bank. Edmond State Bank has an
    add-on loan with an interest rate of 12 percent and monthly payments for one year. What
    are the monthly payments this customer will need to make on this loan?
    3. A customer wants to borrower $25,000 for one year. TRC State Bank has a discount loan
    with an interest rate of 15 percent. How much of the loan will be available to the
    customer? What is effective interest rate?
    4. Paul Carter requests an automobile loan of $15,000 that will be repaid over the next four
    years in monthly repayments. The First National Bank tells Mr. Carter that his total
    finance charges will be $4675.20. What is the APR on this loan?
    5. Jane Smith has asked for a 30 year mortgage to purchase a home in Oklahoma City,
    Oklahoma. The purchase price of the home is $150,000 of which $125,000 must be
    borrowed. If the APR on this loan is 8 percent, how much will Jane's total financing
    charges be?

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