How does the interest rate affect your credit payments? What is meant by simple interest? What is the annual percentage rate (APR), and when is it used?
> What is the interest payments option? How does it differ from the installment payments option?
> What is risk? What is risk management? How does insurance fit into risk management?
> Paul wants to purchase his own home. He currently lives in an apartment, and his rent is being paid by his parents. Paul’s parents have informed him that they would not pay his mortgage payments. Paul has no savings, but can save $400 per month. The home
> If the cost of refinancing their house is $3,860, how long would Doug and Lynn (from problem 9) have to remain in their home to recover the cost? (Ignore any interest on the savings in answering this question.)
> Matt (from problem 7) paid mortgage interest of $4,330 during his first year in the condo. His property taxes were $600, and his homeowner’s insurance was $460. If Matt is in a 25% marginal tax rate bracket, what were his tax savings for his first year?
> Matt has found a condominium in an area where he would enjoy living. He would need a $5,000 down payment from his savings and would have to pay closing costs of $2,500 to purchase the condo. His monthly mortgage payments would be $520 including property
> Teresa rents her apartment for $650 per month, utilities not included. When she moved in, she paid a $700 security deposit using money from her savings account that was paying 3% interest. Her renter’s insurance costs her $60 per year. What are Teresa’s
> This month you made a mortgage payment of $700, of which $600 was an interest payment and $100 a payment of the loan principal. You are in the 25% marginal tax bracket. What are the tax savings as a result of this payment?
> Lloyd and Jean are considering purchasing a home requiring a $75,000 mortgage. The payment on a 30-year mortgage for this amount is $498.97. The payment for a 15-year maturity is $674.12. What is the difference in the total interest paid between the two
> Larry and Laurie have found a home and made a $125,000 offer that has been accepted. They make a down payment of 10%. Their bank charges a loan origination fee of 1% of the loan and points of 1.5% (both are based on the loan amount). Other fees include a
> Dorothy and Matt are ready to purchase their first home. Their current monthly cash inflows are $4,900, and their current monthly cash outflows are $3,650. Their rent makes up $650 of their cash flows. They would like to put 10% of their cash inflows in
> What are settlement options? Which option should you choose?
> Insurance. Justin’s new FHA mortgage is for $131,500. How much will his overall mortgage increase with an upfront fee of 1.5%? How much will his total mortgage be with the upfront PMI fee added? Will Justin always pay PMI on this loan?
> Why is the reputation of the school system in the area of the home you are buying important?
> List the criteria you should use when selecting a home.
> Assume that the Sampsons have paid off their credit card debt and have also achieved their goal of saving $5,000 that they will use as a down payment on a new car. (They have also been saving an additional $300 per month over the last year for their chil
> Jack needs to borrow $1,000 for one year. Bank South will give him the loan at 9%. SunCoast Bank will give him the loan at 7% with a $50 loan origination fee. First National will give him the loan at 6% with a $25 loan origination fee. Determine the tota
> List some typical incentives credit cards issuers offer to encourage you to use their card.
> What is a prepaid credit card? How does it differ from a secured credit card?
> Propose possible solutions to reduce an excessive credit card balance.
> Discuss some ways that charging large amounts on your credit cards might affect your overall financial planning.
> What credit management decisions should be included in your financial plan?
> Explain how use of the Internet can expedite the purchase of life insurance. Why do many customers prefer this method?
> Should you view credit cards as a source of funds? Why or why not? Why should you self-impose a tight credit limit?
> When is a finance charge applied to credit purchases? What is the common range of interest rates on credit cards?
> How might you eliminate the annual fees that are charged by some credit cards?
> What is a credit limit? How can you increase your credit limit?
> Paul’s credit card closes on the 3rd of the month, and his payment is due on the 30th. If Paul purchases a stereo for $300 on June 12th, how many interest-free days will he have? When will he have to pay for the stereo in full in order to avoid finance c
> Chen recently graduated from college and accepted a job in a new city. Furnishing his apartment has proved more costly than he anticipated. To enable him to make purchases, he applied for and received a credit card with a $5,000 credit limit. Chen planne
> Eileen (from question 7) wants a car that costs $12,000. How long would it have taken Eileen to save for the outright purchase of the car if she did not have any credit card debt and used the interest payments to save for the purchase of the car? Eileen
> Troy has a credit card that charges 18% on outstanding balances and on cash advances. The closing date on the credit card is the first of each month. Last month Troy left a balance on his credit card of $200. This month Troy took out a cash advance of $1
> Margie has had a tough month. First, she had dental work that cost $700. Next, she had her car transmission rebuilt, which cost $1,400. She put both of these unexpected expenses on her credit card. If she does not pay her credit card balance when due, sh
> Chrissy currently has a credit card that charges 15% interest. She usually carries a balance of about $500. What will her total annual interest be with her current card?
> List and briefly discuss the factors that affect an individual’s life insurance premium.
> What are three advantages of using a credit card? Can you think of any disadvantages?
> Why should you review your credit card statement before paying the bill? What steps should you take if you discover an error?
> Explain why getting a cash advance on your credit card is a costly source of funds.
> Explain how the Credit CARD Act changed the way credit card issuers assess late fees.
> What is overlimit protection? Explain why consumers should use this feature sparingly.
> How does a secured credit card differ from a standard credit card? Under what circumstances would you need a secured credit card?
> Describe the role of the Consumer Financial Protection Bureau.
> Describe some of the key provisions of the Credit CARD Act.
> Explain how you can impose your own limits on credit card spending.
> What are the three methods used by financial institutions to calculate finance charges on outstanding credit card balances? Briefly describe how interest is computed under each method.
> Describe the budget method to determine the amount of life insurance needed. What elements must be considered in making this calculation?
> Why is paying your credit card balance in full so important? What should you do if you can’t avoid credit card debt? Explain.
> List five tips for using credit cards wisely.
> What should you consider when comparing credit cards?
> List some items that appear on the credit card statement. What accounts for the difference between your previous balance and your new balance?
> What is a cash advance? How are they commonly obtained? Discuss interest rates and grace periods with regard to cash advances.
> What is a grace period? How can you use it to your advantage?
> Discuss how credit cards offer incentives to use the cards. How else might credit card companies reward cardholders with excellent credit ratings?
> Describe the differences between a credit card like MasterCard or Visa and a retail (or proprietary) card. How do credit and retail cards generate revenue? What is the biggest disadvantage of a proprietary card?
> Brad Brooks is pleased with your assistance in preparing his personal financial statements and your suggestions for improving his personal financial situation. He has called you for additional guidance. First, he wants to know what factors he should cons
> Discuss why life insurance needs should not be based on a family’s dreams for the future.
> What are some of the risks associated with investing in real estate?
> Brad Brooks is pleased with your assistance in preparing his personal financial statements and your suggestions for improving his personal financial situation. He has called you for additional guidance. First, he wants to know what factors he should cons
> Brad Brooks is pleased with your assistance in preparing his personal financial statements and your suggestions for improving his personal financial situation. He has called you for additional guidance. First, he wants to know what factors he should cons
> Brad Brooks is pleased with your assistance in preparing his personal financial statements and your suggestions for improving his personal financial situation. He has called you for additional guidance. First, he wants to know what factors he should cons
> What credit restrictions apply to persons under age 21?
> How are payments calculated under the add-on interest method?
> How does the maturity of a loan affect the monthly payments? What should you consider when selecting the maturity?
> What does the personal loan process involve?
> Explain when you might use a deferment on student loans. What are the disadvantages of deferring student loans?
> How does a prepayment penalty impact your decision to pay a loan off early?
> How can borrowers enjoy tax savings by using a home equity loan? How are these tax savings computed?
> Describe the income method to determine the amount of life insurance needed. What is the disadvantage of this method?
> What should be the first step in financing a purchase of a car? Aside from the interest rate, what two factors will have the largest impact on the size of your monthly payment?
> Beth has just borrowed $5,000 on a four-year loan at 8% simple interest. Complete the amortization table at the bottom of the page for the first five months of the loan. Beginning Balance Payment Amount Applied to Interest Appled to Principal Paymen
> Fritz and Helga work for a local manufacturing company. Since their marriage five years ago they have been working extensive overtime, including Sundays and holidays. Fritz and Helga have established a lifestyle based on their overtime earnings. Recently
> John and Cheryl just borrowed $30,000 on a home equity line of credit. The interest rate for the loan is 6.75% for the entire year, and they took out the loan on May 1. John and Cheryl are in the 28% tax bracket. What will be their tax savings for the fi
> Bill wants to purchase a new car for $45,000. Bill has no savings, so he needs to finance the entire purchase amount. With no down payment, the interest rate on the loan is 13%, and the maturity of the loan is six years. His monthly payments will be $903
> Refer to question 5. If Sharon had been able to afford the four-year loan, how much interest would she have saved compared to the five-year loan? Data from Question 5: Sharon is considering the purchase of a car. After making the down payment, she will
> Sharon is considering the purchase of a car. After making the down payment, she will finance $15,500. Sharon is offered three maturities. On a four-year loan, Sharon will pay $371.17 per month. On a five-year loan, Sharon’s monthly payments will be $306.
> If Beth had taken the same loan as an add-on interest loan, how would her payments differ? Why is there a difference?
> Eileen is a college student who consistently uses her credit card as a source of funds. She has maxed out her credit card at the $6,000 limit. Eileen does not plan on increasing her credit card balance any further, but has already been declined for a car
> Jarrod has narrowed his choice to two credit cards that may meet his needs. Card A has an APR of 21%. Card B has an APR of 14% but also charges a $25 annual fee. Jarrod will not pay off his balance each month, but will carry a balance forward of about $4
> What is variable life insurance? What are the advantages and disadvantages of variable life policies? How can individuals avoid the high fees of variable life insurance?
> You just borrowed $7,500 and are charged a simple interest rate of 8%. How much interest do you pay each year?
> What information will you need to supply when applying for credit? What kinds of attributes are creditors looking for? Do you need to have all these attributes to get credit?
> The Sampsons have been carrying a balance of about $2,000 on their credit card. They have been paying the minimum amount due and have been using any excess net cash flows to implement their new savings plan for a new car and their children’s college educ
> The Sampsons have been carrying a balance of about $2,000 on their credit card. They have been paying the minimum amount due and have been using any excess net cash flows to implement their new savings plan for a new car and their children’s college educ
> What are payday loans? Why should you avoid payday loans as a source of funds?
> What type of information is contained in the Buyers Guide?
> Explain the advantages and disadvantages of buying a new car instead of a used car.
> What is peer-to-peer lending? What are the advantages of a peer-to-peer loan?
> Why may a weak economy cause the limit on your home equity line of credit to decline? Why may a strong economy cause the limit on your home equity line of credit to rise?
> How are interest rates calculated for the two types of home equity loans? Why do borrowers prefer home equity loans to other loans?
> What is universal life insurance? How does it differ from term life and whole life?
> Discuss the two ways financial institutions might define equity to set credit limits. What happens if you default on a home equity loan?
> What is home equity? Describe how home equity loans work.
> Who extends student loans? What are the characteristics of student loans?
> What are the advantages and disadvantages of leasing a car? Give some advice for someone considering leasing.
> Describe some techniques that car salespeople might use in negotiating the price of the car. What should you be aware of at “nohaggle” dealerships?
> Why is purchasing a new car online not as efficient as buying a new car at a dealership?
> List the steps in buying a car. What financial criteria should be considered? Discuss each briefly.
> Why are loan payments under the simple interest method usually lower than loan payments under the add-on interest method?
> What is simple interest? What information is needed to compute it? What information is contained in a loan repayment schedule?
> What is the purpose of the annual percentage rate measurement? Could lenders with the same interest rates report different APRs?
> Why is the premium paid for whole life higher than the premium for term life? What alternative approach to purchasing life insurance might provide the same benefits as whole life?
