Factors to consider Before Taking Out a Consumer Loan You've made the decision to purchase an item that is affordable only with a loan. When shopping for a loan, there are many aspects of the loans that you should examine. Which of the following questions should be asked and answered about a specific loan proposal before accepting a lender's offer? Check all that apply. Do the loan's monthly payments fit in my budget? What is the total cost of transaction (cost of item purchased plus cost of loan)? What late payment charges, if any, can be accessed, and when? If I accept the loan, what is my new debt safety ratio? Do you need, or only want, the item being purchased? You're shopping for a big loan, but you have misgivings about Edison, the loan officer, at an institution you just visited. What are some reasons that may have you uneasy about accepting a loan there? Check all that apply. Edison spent most of the time emphasizing benefits of loans with balloon payments and interest-only payments. Edison gave you a range of terms and said they'll be worked out at closing. Edison discussed options for taking out a smaller loan, such as selling current assets to raise a bigger down payment. Edison said that his loan was most likely the only one you'd be able to obtain. Your parents may be able to help you with the down payment, but Edison told you to assume they will and to enter a down payment on the application including their contribution. Edison said that today is the only day you can secure the loan with favorable terms. Edison told you that the interest rate is the only important fee to worry about and that discussing the APR is an unnecessary complication. When you filled out the loan application, Edison told you to leave out the smaller amounts you owe to department stores. What are the characteristics of your reasons for feeling uneasy about Edison the loan officer? Check all that apply. The way the loan officer omitted pertinent information The loan officer's embellishment of the facts Feeling under pressure to make a decision Your friend suggested you look into a variable-rate loan. What questions should you ask? Check all that apply. What is the interest rate tied to? Can I afford the maximum possible monthly payment? How many points are added to the base rate? Is there a maximum rate? Given the long list of relevant loan-related considerations described above, the paradox of choice often arises when attempting to make borrowing decisions. Which of the following phrases addresses the characteristics and recommended solutions for this phenomenon? Check all that apply. Arises when there are too many complicated choices, such you can become overwhelmed and make poor decisions Identify your goals and a framework for evaluating any trade-offs that must be made when making your decision Be prepared to ask for assistance Arises when there are too few alternatives and you wish you had more features or options to select from