Podcast
Questions and Answers
Which method calculates finance charges by summing the outstanding balances for each day of the billing cycle and dividing by the number of days in the cycle?
Which method calculates finance charges by summing the outstanding balances for each day of the billing cycle and dividing by the number of days in the cycle?
- Average daily balance method (correct)
- Amortization method
- Simple interest method
- Installment method
What does PITI stand for when referring to mortgage costs?
What does PITI stand for when referring to mortgage costs?
- Personal, Interest, Taxes, Investments.
- Principal, Income, Taxes, Insurance.
- Principal, Interest, Taxes, Insurance. (correct)
- Personal, Income, Taxes, Investments.
Which type of loan typically has the interest rate adjusted periodically based on a benchmark index?
Which type of loan typically has the interest rate adjusted periodically based on a benchmark index?
- Single payment loan
- Adjustable-rate loan (correct)
- Fixed-rate loan
- Interest-only loan
When calculating the total purchase price using an installment loan, which of the following accurately represents the components?
When calculating the total purchase price using an installment loan, which of the following accurately represents the components?
What is the primary difference between a 15-year and a 30-year fixed-rate mortgage?
What is the primary difference between a 15-year and a 30-year fixed-rate mortgage?
In the context of amortization tables, what does the payment amount typically include?
In the context of amortization tables, what does the payment amount typically include?
What is the correct formula to calculate sales tax?
What is the correct formula to calculate sales tax?
Flashcards
APR (Annual Percentage Rate)
APR (Annual Percentage Rate)
The total cost of borrowing money, expressed as a percentage of the amount borrowed.
Installment loan
Installment loan
A loan that requires regular payments of principal and interest over a set period.
Amortization
Amortization
The practice of making regular payments on a loan, gradually reducing the principal amount owed.
Principal
Principal
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Interest-only loan
Interest-only loan
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Adjustable-rate loan (ARM)
Adjustable-rate loan (ARM)
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Fixed-rate mortgage
Fixed-rate mortgage
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Study Notes
Consumer Credit
- Identify costs, benefits, and sources of credit types
- Calculate sales tax and total price (including computer, sales tax)
- Calculate total purchase price adding interest/finance charges
- Calculate costs of owning/buying items (e.g., cars, appliances, homes)
- Calculate finance charges for single payment loans
- Calculate installment loan costs (amount financed, installment price, finance charge, installment payments)
- Calculate estimated annual percentage rate (APR) using a table
- Compare leasing vs. buying costs
- Calculate finance charge and new balance using average daily balance method
- Use amortization tables to determine loan payment, interest, and balance
- Calculate annual and monthly percentage rate (for credit cards/loans)
- Calculate monthly mortgage payment
- Calculate total interest and PITI (Principal, Interest, Taxes, and Insurance) on a mortgage
- Create a partial mortgage amortization schedule
- Compare total interest paid on 15-year and 30-year fixed-rate mortgages
- Define and compare interest-only, fixed-rate, and adjustable-rate loans
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Description
Test your understanding of consumer credit by identifying costs, benefits, and various sources of credit types. This quiz covers essential calculations including sales tax, interest, monthly payments, and comparisons between leasing and buying. Dive into amortization tables and understand the financial aspects of major purchases like cars and homes.
