Lesson Loan repayment capacity by alicejenny


									                                                                         Lesson 5

                            CONSUMER CREDIT
Vocabulary Practice
Select the answer that correctly completes each sentences
1. We’re paying for the furniture we bought in monthly _____
   a. installments b. budgets   c. cash flow
   answer : a. installments
2. The bank uses a ____ to find out how prospective borrowers repaid their past
   a. profile      b. loan agreement c. credit bureau
   answer : c. credit bureau
3. Mr. Harris’s application for a loan was approved because he is ____
   a. Creditworthy b. on time    c. capacity
   answer : a. Creditworthy
4. Because the borrower defaulted on his repayment of the loan, the bank will
   hold the ____ responsible.
   a. reporting agency   b. co-signer   c. budget
   answer : c. budget
5. Lisa and Frank Edwards developed a ____ of monthly expenses to see how
   much money they would have left over to make loan payments on a refrigerator
   a. data b. profile    c. consumer credit
   answer : b. profile

Comprehension Check
A. State whether each statement is true or false, base on the information in the

   1. Lisa Edwards has a checking account at the Bay Federal Bank (False)
   2. It is easier to get a passbook loan (True)
   3. The credit bureau provides the bank with data about prospective borrowers
   4. The bank investigates the loan applicant’s capacity to repay the loan (True)
   5. Lisa Edwards has charge account only in her husband’s name (False)
   6. Mr. and Mrs. Edwards have bought merchandise on the installment plan
   7. Charles Ferguson requires that Mr. Edwards co-sing his wife’s loan (False)
   8. Although Lisa Edwards has no cash flow problems, she has to apply for a loan
   9. Mr. Ferguson is pleased that Lisa Edwards has developed a profile of
       monthly expenses (True)
   10. The bank will probably extend credit to Lisa Edwards because she seems
       creditworthy (True)
B. Answer each of the following questions orally
   1. How would help it Lisa Edwards to have a savings accounts at the Bay
      Federal Bank?
      Answer : It would help Lisa Edwards to have a savings accounts at the Bay
               Federal Bank by apply a loan
   2. How will the bank find out about Ms. Edward’s repayment of debts in the
      Answer : The bank will uses a credit bereau
   3. Why does the head of the credit department of the bank say that Lisa
      Edwards’s husband will not have to co-sign the loan?
      Answer : Besause Lisa Edwards is obviously a creditworthy woman
   4. What are some of the things that Ms. Edward must know about the loan if
      the bank decides to extend her credit?
      Answer : The Ms. Edward must to know are service charge and the annual
   5. Why does Charles Ferguson advise potential borrowers to develop a profile
      of their monthly expenses?
      Answer : Because he wants her’s potential borrowers know how much money
               they have left to make loan payment

C. Combine each group of words into a sentences that expresses information
   contained in the dialogue. You may add whatever words are necessary to make a
   grammatically correct sentence
   1. bank/data/reporting agency
      Answer : The bank uses a reporting agency that give them data
   2. Mr. and Mrs. Edwards/merchandise/on time
      Answer : Mr. and Mrs. Edwards have bought merchandise on time before and
               have made loan agreements
   3. Lisa Edwards/salary/public relations person
      Answer : Lisa Edwards have a good salary as a public relations person
   4. high inflation/problems/cash flow
      Answer : High inflation have made some problems with cash flow
   5. estimated monthly budget/repayment capacity/loan
      Answer : By the estimated monthly budget we will be able to see the
              repayment capcity for loan

D. Composition. Write a short paragraph explaining the ways in which a bank
   determines if loan applicant is creditworthy or not.
   Answer : The bank uses a credit bureau to find out how prospective borrowers
   repaid their past debts. To decides a loan applicant is creditworthy or not, they
   will investigate the applicant’s charcter and look into the applicant’s capacity to
   repay vey thoroughly.
             Building Your Vocabulary
A. Matching. Find the words in the right-hand column that match the words
   closest in meaning in the left-hand column.

  1.   budget                       a. reporting agency
  2.   loan agreement               b. ability
  3.   in installment               c. information
  4.   credit bereau                d. profile
  5.   co-signer                    e. on time
  6.   data                         f. contract
  7.   capacity                     g. co-maker

  1.   budget                 = d. profile
  2.   loan agreement         = f. contract
  3.   in installment         = e. on time
  4.   credit bereau          = a. reporting agency
  5.   co-signer              = g. co-maker
  6.   data                   = c. information
  7.   capacity               = b. ability

B. Rewriting sentences. Rewrite each of the following sentences replacing the
   underlined word or words with the correct form of one of the new words of
   this lesson.
  1. The bank decided to grant credit to Ms. Edwards
      The bank decided to extend credit to Ms. Edwards
  2. The credit department is investigating the applicant’s moral qualities
      The credit department is investigating the applicant’s character
  3. My father was the other person who signed the loan agreement
      My father was the co-signer
  4. You can’t ask for a new loan until you repay the unpaid part of the old loan
      You can’t ask for a new loan until you repay the balance of the old loan
  5. This is the first partial payment of my loan
      This is the first installment of my loan
  6. The banks are not giving loans these days
      The banks are not giving credit these days
  7. Banks grant loans using the borrower’s savings accounts as collateral more
     easily than other types of loans
      Banks grant passbook loan more easily than other types of loans

Structure Practice
A. Restate each of the following sentences changing the word order as in the

  1. The credit bureau sends them data
      The credit bureau sends data to them
  2. The Bay Federal Bank offered its customers passbook loans
      The Bay Federal Bank offered its passbook loans to customers
   3. Ms. Carson will bring us a profile of expenses
        Ms. Carson will bring a profile of expenses to us
   4. I owe the bank the next installment
        I owe the next installment to the bank
   5. The credit department wrote her a letter
        The credit department wrote a letter to her
   6. They’re going to pay him the balance
        They’re going to pay the balance to him
   7. Jhon’s co-signer had to pay me the money
        Jhon’s co-signer had to pay the money to me
   8. We’ve offered Lisa and Frank Edwards credit
        We’ve offered credit to Lisa and Frank Edwards
   9. Did you give them the information?
        Did you give the information to them?
   10. I’ll lend you the outstanding amount
        I’ll lend the outstanding amount to you

B. Organize the following strings of elements into sentences incluing direct object
   and indirect object pronouns

   1. a loan/give/the borrower/the lender
       The lender give the borrower a loan
   2. us/send/data/they
       They send us data
   3. that bank/them/credit/extand
       That bank extand them credit
   4. write/the credit manager/me/a contract
       The credit manager write me a contract
   5. you/him/furniture/buy
       You buy him furniture
   6. she/the balance/the bank/pay
       She pay the bank the balance
   7. you/the down payment/lend/he
       He lend you the down payment
   8. show/the budget/Charles/me
       Charles show me the budget

C. Organize the following strings of elements into sentences as in the model. Use
   the past tense. Note : the verbs of sentences 2, 3, 5, and 7 require the
   preposition to before the indirect object.

   1.   we/write/the/we/paying on time
   2.   I/explain/him/they/investigating/his character
   3.   she/mention/you/she/co-signing/a loan
   4.   Mr. Ferguson/tell/us/he/not extending/more credit
   5.   the bank/say/it/calculating/annual percentage rate
   6.   you/inform/the secretary/you/applying/for consumer crdit
   7. they/admit/you/they/defaulting/on the loan
   8. he/show/me/he/receiving/a lot of data

D. Add an appropriate indirect object to each of the following sentences.

   1. I lent $3,000.00
   2. You still owe money
   3. The store will give credit
   4. The credit bureau sent the data
   5. Did she show the estimated budget?
   6. I taught how to calculate the annual percentage rate
   7. That company is selling expensive furniture
   8. Lisa said she offered a large down payment
   9. We’re going to bring the contracts he requested
   10. She is going to pay in monthly installments

Building Sentences
A. Select elements from columns A, B and C to make at least ten sentences. Be
   sure that the sentences you form make sense.]

   Lisa Edwards                extends      a monthly budget
   The bank                    made         consumer credit
   A borrower                  fills out    a loan application
   Mr. Ferguson                prepared     the reporting agency
   The credit department       approves     a passbook loan
                               called       data
                               gives        the balance
                               paid         a loan agreement

B. Complete each of the following sentences by selecting a or b for each of the
   blank spaces.

   1. ___ offered ___ a passbookloan
      a. me       b. they
   2. The necessary information? The credit bureau sent __ ___
      a. it       b. to us
   3. Her cash flow is good; I checked __ ___
      a. for you  b. it
   4. Should ___ write ___ a contract?
      a. you      b. her
   5. __ have to show ___ the profile
      a. us       b. you


A. You are the head of the credit departmentof a bank. Using the new vocabulary
   of the lesson, explain the following terms to a prospective borrowers :
     1. character and cappcity
     2. co-sign
     3. credit bureau

B. As a loan applicant, you explain to the bank’s credit manager why you need a
   loan and how you plan to repay it. Discuss your reasons and methods and
   mention the following terms in your explanation:
     1. cash flow
     2. on time
     3. profile of monthly payments

1.  How many people can apply for membership with this application?
2.  Which well-known credit cards can you apply for?
3.  What is the yearly cost of membership?
4.  What is some of the personal data the applicant is asked to provide?
5.  Why do they ask the applicant how many years he has been at this present
    address and how many years he has living at his previous address?
6. Why do they ask the applicant how many years he has been working at his
    present position and how many years he was with his previous employer?
7. Why do they ask the applicant his gross monthly salary?
8. What is some of the personal information the co-applicant must provide?
9. Why do you think they ask the applicant to name his nearest relative not living
    with him?
10. What other sources of income, in addition to the gross monthly salary, can the
    applicant or co-applicant list?
11. What information do they ask for regarding the applicant’s or co-applicant’s
12. If the applicant or co-applicant fails to disclose all debts, what happens to his
13. In signing the credit card application, what do the applicant and co-applicant
    agree to?

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