CCDS Consumer Debt Products & Interest Calculations 2

Question 1

Under the Truth in Lending Act (TILA), lenders must disclose the APR primarily to help consumers:

Accepted Answer

Compare the true cost across different loan offers

Answer

TILA mandates APR disclosure so consumers have a standardized metric to compare financing costs across competing offers.

Question 2

A consumer has a $10,000 auto loan at 6% annual interest amortized over 48 months. If the monthly payment is approximately $235, how much of the FIRST payment is interest?

Accepted Answer

$50

Answer

First-month interest = $10,000 × (6%/12) = $10,000 × 0.005 = $50.

Question 3

Which consumer debt product typically carries the highest average interest rate?

Accepted Answer

Credit card

Answer

Credit cards routinely carry the highest rates among common consumer debt products, often ranging from 18% to over 30% APR.

Question 4

A 'teaser rate' on a credit card is best described as:

Accepted Answer

A temporary promotional APR that resets to a higher standard rate

Answer

Teaser rates are introductory promotional APRs offered for a limited period before reverting to the card's standard (higher) APR.

Question 5

The Credit CARD Act of 2009 restricts credit card issuers from applying rate increases to:

Accepted Answer

Existing balances already carried on the account

Answer

The Credit CARD Act prohibits retroactive rate increases on existing balances, protecting consumers from sudden cost increases on debt already incurred.

CCDS - Certified Consumer Debt Specialist Practice Test

CCDS - Certified Consumer Debt Specialist Practice Test

CCDS Consumer Debt Products & Interest Calculations 2