Bank Mgt. 5th Ed, Chapter 12 - 1 Consumer Lending Chapter...

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1 Consumer Lending Consumer Lending Chapter 12 Chapter 12
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2 Types of Consumer Credit Automobile Loans Direct-Bank/Auto Buyer Indirect-Bank Acquires From Dealer Floor Plan Financing Revolving Credit Credit Cards Debit Cards Overdraft Loans * Continued
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3 Types of Consumer Credit (Continued) Home Equity Loans Possibly Collateralized Revolving Loan Average Loan-to-Value of 77% New in Texas Mobile Home Financing Most Indirect (Arranged Through Dealers) Maturity Less Than Conventional Mortgages (10 to 12 Years Common) Interest Rates Normally Higher (4 to 5% More) Risks Normally Greater *
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4 Securitization of Consumer Loans In 1985,Securitization Was Financial Breakthrough In Consumer Lending It Is Selling Part Of Loan Portfolio To Investors In Form Of Securities Significant Conversations Of Automobile Loans & Credit Card Loans Into Securities (In 1992, $109 Billion Up From $15 Billion In Five Years)
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5 Interest Charge Considerations Most Consumer Loans At Add-on Rate Add-on Is Applied (Added) To Principal Amount
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