11 Loans - Prentice-Hall, Inc. Characteristics of Consumer...

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Prentice-Hall, Inc. 1 Chapter 7 Using Consumer Loans: The Role of Planned Borrowing Characteristics of Consumer loans • Single payment (balloon) vs. installment loans (____________) • Secured vs. unsecured • Variable rate (tied to other national rate) vs. fixed rate The Loan Contract: all the conditions of the loan • The ___________ • The ______________ of payments • ____________ amount financed • _________ interest is calculated The Loan Contract: The Clauses 1. Insurance agreement clause 2. Acceleration clause 3. Deficiency payments clause 4. Recourse clause 1) Insurance Agreement Clause • Requires you to purchase _____________________ that will payoff your loan after your death Normally benefits only the lende • Normally benefits only the lender • Increases your total loan cost 2) Acceleration Clause • Requires the __________________ to be paid-in-full if you miss just one payment • Are standard on most loans • Normally not invoked if you make a good faith effort to pay
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Prentice-Hall, Inc. 2 3) Deficiency Payments Clause • Requires any amount in excess to be paid if the __________________ does not satisfy the loan. Also requires payment of any outstanding
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This note was uploaded on 06/06/2011 for the course HACE 3200 taught by Professor B during the Spring '09 term at University of Georgia Athens.

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11 Loans - Prentice-Hall, Inc. Characteristics of Consumer...

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