$5.$ General factors to consider when shopping for a consumer loan

Factors to Consider Before Taking Out a Consumer Loan

You$$ve made the decision to purchase an item that is affordable only with a loan. When shopping for a loan, there are many aspects of the loans that you should examine. Which of the following questions should be asked and answered about a specific loan proposal before accepting a lender$$s offer? Check all that apply.

Where is the lending institution located?

If I accept the loan, what is my new debt safety ratio?

What is the reason for loan?

What late payment charges, if any, can be accessed, and when?

Do the loan$$s monthly payments fit in my budget?

You$$re shopping for a big loan, but you have misgivings about Felix, the loan officer, at an institution you just visited. What are some reasons that may have you uneasy about accepting a loan there? Check all that apply.

Felix said that today is the only day you can secure the loan with favorable terms.

When you filled out the loan application, Felix told you to leave out the smaller amounts you owe to department stores.

When you filled out the application, Felix said if you weren$$t sure about something on it$,$ you could take the application home and complete it when you had the correct answers.

Felix gave you a range of terms and said they$$ll be worked out at closing.

Felix spent most of the time emphasizing benefits of loans with balloon payments and interest$-$only payments.

Felix volunteered pertinent information that you didn$$t even know enough to ask about.

Felix encouraged you to shop around.

Felix told you that the interest rate is the only important fee to worry about and that discussing the APR is an unnecessary complication.

What are the characteristics of your reasons for feeling uneasy about Felix the loan officer? Check all that apply.

Feeling under pressure to make a decision

The way the loan officer omitted pertinent information

The loan officer$$s embellishment of the facts

Your friend suggested you look into a variable$-$rate loan. What questions should you ask? Check all that apply.

Can I afford the maximum possible monthly payment?

Is there a maximum rate?

What changes after a rate adjustment$$the monthly payment amount or the number of monthly payments left on the loan?

What is the interest rate tied to$?$

Given the long list of relevant loan$-$related considerations described above, the paradox of choice often arises when attempting to make borrowing decisions. Which of the following phrases addresses the characteristics and recommended solutions for this phenomenon? Check all that apply.

Arises when there are too few alternatives and you wish you had more features or options to select from

Keep it simple and select the easiest or least expensive alternative

Identify your goals and a framework for evaluating any trade$-$offs that must be made when making your decision

Prepare a list of possible alternatives and make a random selection