Car Financing and Amortization Analysis Quiz
Test your knowledge on car financing, APR, amortization, leasing vs. buying, and more with this automotive finance quiz!
#1
What is the definition of car financing?
Purchasing a car outright with cash
Obtaining a loan to purchase a car
Leasing a car for a fixed period
Selling a car to a dealership
#2
What does APR stand for in the context of car loans?
Automobile Price Rate
Annual Percentage Rate
Auto Payment Requirement
Annual Payment Ratio
#3
What is amortization in the context of car financing?
Paying off the loan in fixed installments
Selling the car to pay off the loan
Delaying loan payments
Obtaining a new loan to pay off the old one
#4
Which of the following affects the monthly payment amount in a car loan?
Loan term
Vehicle color
Car brand
Borrower's favorite number
#5
What is a balloon payment in car financing?
A payment made with a check shaped like a balloon
A large, lump sum payment due at the end of a loan term
A payment made with balloons attached to the car
A discount given by the dealership
#6
What is the loan-to-value (LTV) ratio in car financing?
The ratio of the car's weight to its horsepower
The ratio of the loan amount to the car's value
The ratio of the car's age to its mileage
The ratio of the down payment to the loan amount
#7
Which of the following is an advantage of leasing a car over buying?
Ownership of the car
Lower monthly payments
No mileage restrictions
Ability to customize the car
#8
What is the grace period in car financing?
A period during which the car can be returned for a full refund
A period during which no payments are required after the loan term ends
A period during which the borrower can make late payments without penalty
A period during which the interest rate is reduced
#9
What is the difference between a fixed-rate and variable-rate car loan?
The fixed-rate loan has a changing interest rate, while the variable-rate loan has a constant interest rate.
The fixed-rate loan has a constant interest rate, while the variable-rate loan has a changing interest rate.
Both types of loans have the same interest rate structure.
Fixed-rate loans are only available for new cars, while variable-rate loans are for used cars.
#10
In the context of car financing, what is equity?
The car's market value
The difference between the car's value and the amount owed on the loan
The monthly payment amount
The loan term
#11
What is the residual value of a leased car?
The value of the car at the end of the lease term
The initial price paid for the lease
The value of the car at the beginning of the lease term
The value of any added features to the car
#12
What is the role of a co-signer in car financing?
To inspect the car before purchase
To provide a loan for the car
To legally share responsibility for the loan
To insure the car
#13
What is negative equity in car financing?
The value of the car exceeds the loan amount
The borrower owes more on the loan than the car is worth
The interest rate on the loan is too high
The car depreciates slower than expected
#14
What is a prepayment penalty in car financing?
A fee charged for making loan payments early
A discount given for paying off the loan ahead of schedule
A fee charged for purchasing a car without financing
A fee charged for late loan payments
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