Chapter 14 Quiz 1

The APR represents the:

The finance charge is equal to the total of all monthly payments:

The amount financed equals the cash price plus down payment.

The average daily balance is equal to the sum of daily balances:

Today most companies calculate finance charge on their credit card accounts as a percentage of the yearly balance.

Ruth Sloan bought a new car for $20,000. She put down $6,000 and paid $280 for 60 months. The total finance charge to Ruth is:

Revolving charge accounts must be completely paid off by end of the month.

The U.S. Rule can be applied to open credit payments.

The Fair Credit and Charge Card Disclosure Act of 1988 is optional advice to credit card companies.

Which one of the following statements is incorrect?

APR cannot by calculated by use of tables.

The APR represents the stated interest rate.

The Truth in Lending Act regulates interest charges.

The Truth in Lending Act requires the APR be accurately stated to nearest 1/4 of 1 percent.

Amortization is not a payment process.

Most companies calculate the finance charge on credit card accounts as a percentage of the:

Finance charge equals total of all monthly payments less amount financed.

Amount financed is equal to:

The cost of credit reports is normally included in the amount financed.