Ch 07: Assignment - Using Consumer Loans 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. What late payment charges, if any, can be accessed, and when? Does the loan have a prepayment penalty? What is the loan's APR? If I accept the loan, what is my new debt safety ratio? Where is the lending institution located? You're shopping for a big loan, but you have misgivings about John, 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. John volunteered pertinent information that you didn't even know enough to ask about. John spent most of the time emphasizing benefits of loans with balloon payments and interest only payments. John told you that the interest rate is the only important fee to worry about and that discussing the APR is an unnecessary complication John discussed options for taking out a smaller loan, such as selling current assets to raise a bigger down payment. John pointed out that the APR and interest rate were different. John said that today is the only day you can secure the loan with favorable terms. When you filled out the application, John 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 When you filled out the loan application, John told you to leave out the smaller amounts you owe to department stores What are characteristics of your reasons for feeling uneasy about John the loan officer? Check all that apply. The way the loan officer omitted pertinent information The loan officer's embellishment of the facts Feeling under pressure to make a decision Your friend suggested you look into a variable-rate loan. What questions should you ask? Check all that apply. What is the interest rate tied to? Is there a maximum rate? How often is the rate subject to change? Can I afford the maximum possible monthly payment? 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. Identify your goals and a framework for evaluating any trade-offs that must be made when making your decision Be prepared to ask for assistance Arises when there are too few alternatives and you wish you had more features or options to select from Prepare a list of possible alternatives and make a random selection de Now Save & Continue