What is included in the finance charge

Reference no: EM133269984

Assignment:

After shopping around, Sue Wallace decided on the car of her choice, a used Honda Civic the dealer quoted her a total price of $10,000. Sue decided to use $2000 of her savings as a down payment and borrow $8000. The salesperson wrote this information on a sales contract that Sue took with her when she set out to find financing.

When Sue applied for a loan, she discussed loan terms with the banking officer. The officer told her that the bank's policy was to lend only 80% of the total price of a used car. Sue showed the officer her copy of the sales contract, indicating that she had agreed to make a $2000, or 20%, down payment on the $10,000 car, so this requirement caused her no problem. Although the bank was willing to make 48-month loans at an annual percentage rate of 9% on used cars, Sue chose a 36-month repayment schedule. She believed she could afford the higher payments, and she knew she would not have to pay as much interest if she paid off the loan at a faster rate. The bank lending officer provided Sue with a copy of the Truth-in-Lending Disclosure Statement shown here:

Questions

1. What is perhaps the most important item shown on the disclosure statement? Why?

2. What is included in the finance charge?

3. What amount will Sue receive from the bank?

Reference no: EM133269984

Questions Cloud

Calculate the predicted and actual trade ratios : Calculate the predicted and actual trade ratios. Comment on your findings given that the actual annual trade between Spain and Ireland is $5.5 billion.

Role of an agent : What happens if the real estate agent makes a deal with a landlord that goes against your instructions - who is liable?

How can we build a lorenz curve from the size distribution : How can we build a Lorenz curve from the size distribution? How can we compute the Gini from the Lorenz curve?

Examine price discrimination practices in train transport : Examine the factors that could have contributed to the decision by the Victorian Department of Transport to reject Singh.

What is included in the finance charge : What is perhaps the most important item shown on the disclosure statement? Why? What is included in the finance charge?

What is the cumulative solar savings : What is the cumulative solar savings (in present value) for the proposed project? Here the cumulative solar savings also mean net present value of the project.

Effect of interest rate reduction in the philippine economy : "The cost of rebuilding the Philippines after typhoon Haiyan could reach USD 5.8bn", a senior official has said.

What are the economic effects on ntms : What are the economic effects on NTMs (use economic figures, diagrams and theory underlying the impacts of NTMs).

Is free trade based on competition : What are the fundamental forces driving the majorityr of international trade? Is free trade based on competition?

User Account

All Pages