Chapter 5 - Chapter 5 Mike Solomich 1 How does cash loan...

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Chapter 5 Mike Solomich 1. How does cash loan credit differ from retail credit? From service credit? A cash credit loan has debt consolidation, lower interest expense, retail credit programs not available, and preference and habit. Retail financing programs are not always available. Consumers prefer to transact all credit-related business with a single bank or credit institution. 2. List and describe 10 reasons consumers might seek a cash loan. Conventional installment loans for automobiles, mobile homes, and recreational equipment. If the funds are being used to purchase a tangible durable good, the bank will generally use the item as collateral. Home equity loan is an installment loan secured by the equity in real estate after subtracting the outstanding first mortgage balance from the market value. Student loans are made to help pay tuition and the other costs related to education. Cash advances on bank credit card plans is a loan obtained with a bank credit card that provides the borrower with cash up to the existing credit limit and at terms specified at the time the card is issued. Overdraft plans provide a borrower with a preapproved loan reserve, generally incorporated into a checking account that is used at the convenience of the borrower when funds are needed. Home equity lines of credit are open-end credit plan with a loan reserve based on the equity owned by the borrower in real estate Single-payment loans are generally short-term loans where funds are advanced for a year or les with an agreement that they will be repaid in one payment at the end of the period. Open-end revolving loans are loans incorporate preapproved lines of credit that allow the bank customer to draw on a maximum amount of credit and to borrow as needed by writing a check or by using a credit card.
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