#1
What is the definition of car financing?
Obtaining a loan to purchase a car
ExplanationSecuring funds through a loan for buying a car.
#2
What does APR stand for in the context of car loans?
Annual Percentage Rate
ExplanationThe annualized interest rate on a loan.
#3
What is amortization in the context of car financing?
Paying off the loan in fixed installments
ExplanationClearing the loan with regular, fixed payments.
#4
Which of the following affects the monthly payment amount in a car loan?
Loan term
ExplanationThe duration of the loan impacts the monthly payment.
#5
What is a balloon payment in car financing?
A large, lump sum payment due at the end of a loan term
ExplanationA substantial final payment concluding the loan.
#6
What is the loan-to-value (LTV) ratio in car financing?
The ratio of the loan amount to the car's value
ExplanationComparison of the loan and car value.
#7
Which of the following is an advantage of leasing a car over buying?
Lower monthly payments
ExplanationLeasing often offers more affordable monthly payments.
#8
What is the grace period in car financing?
A period during which the borrower can make late payments without penalty
ExplanationTime allowance for late payments without penalties.
#9
What is the difference between a fixed-rate and variable-rate car loan?
The fixed-rate loan has a constant interest rate, while the variable-rate loan has a changing interest rate.
ExplanationInterest stability in fixed-rate, fluctuation in variable-rate.
#10
In the context of car financing, what is equity?
The difference between the car's value and the amount owed on the loan
ExplanationNet value after deducting the loan.
#11
What is the residual value of a leased car?
The value of the car at the end of the lease term
ExplanationCar's worth at lease conclusion.
#12
What is the role of a co-signer in car financing?
To legally share responsibility for the loan
ExplanationSharing legal responsibility for the loan.
#13
What is negative equity in car financing?
The borrower owes more on the loan than the car is worth
ExplanationOwing more on the loan than the car's value.
#14
What is a prepayment penalty in car financing?
A fee charged for making loan payments early
ExplanationCharge for early loan payments.