Consumer credit

A bank that is looking at your past payment records on your loans is most likely examining which aspect of the 5 Cs of lending?

• character

• capacity

• collateral

• capital

• conditions

A loan officer is examining your income and the amount of your existing debt payments in deciding whether to make a loan to you today. Which aspect of the 5 Cs of lending is the loan officer most likely looking at?

• character

• capacity

• capital

• collateral

• conditions

These are examples of closed-end credit:

• Mortgage loans

• Department store cards

• Automobile loans

• Installment loans

• Visa credit cards

Larry Arnold gets a direct loan of money to go on vacation with his family. He will repay the loan over the next twelve months. What type of credit did Larry use?

• installment sales credit

• installment cash credit

• single lump sum credit

• revolving credit

• incidental credit

The debt payments-to-income ratio is:

• calculated by dividing total liabilities by net worth.

• calculated by dividing monthly debt payments (not including house payments) by net monthly income.

• determined by dividing your assets by your liabilities.

• a useless ratio for determining your credit capacity.

• rarely used by creditors in determining credit worthiness.