UNIT 23. Costly Credit Arrangements

1. Complete the sentences, using the appropriate words from the box:

Usurious; disclo­sure form; blank spaces; acceleration clause; violators; abuses; balloon payments; suspicious; variable–rate; loan sharking.

1. Consumers may fall prey to ….

2. … loans are illegal under state laws.

3. In … the last payment is much larger than the monthly payments.

4. The … permits the creditor to accelerate the loan, making all future payments due immediately in the event a con­sumer misses a single payment.

5. To prevent credit …, Congress passed the Truth in Lending Act.

6. The law requires creditors to give you special information about … loans if you are being offered this plan.

7. The law also requires that consumers be given a copy of the … containing the credit information.

8. … can be subject to both civil and criminal penalties.

9. If you are … about a lender, check to see if the lender is licensed and whether complaints have been filed.

10. Don’t sign contracts with ….

2. Are the statements true (+) or false (-)? Correct the false statements.

1. Loan sharks lend money at low, often usurious rates of interest.

2. There are a variety of legal but costly credit arrangements that consumers may want to avoid.

3. Balloon payments make it easy for you to make the final payment.

4. Lenders sometimes claim you can wipe out all your bills by making easy monthly payment to them, which they will distribute to your creditors.

5. Consolidation loan may require payments over a shorter period of time and at a higher rate of interest.

6. The law requires creditors to give you certain basic information about the cost of buying on credit.

7. Before making a credit purchase, read and understand the entire contract.

8. Keep receipts for some payments.