#1
Which of the following is a financial benefit of leasing a car instead of buying?
Lower monthly payments
ExplanationLeasing offers lower monthly payments compared to buying.
#2
What is the typical term length for a car loan?
36 months
ExplanationTypically, car loans have a term length of 36 months.
#3
What is the 'down payment' in the context of car financing?
An initial upfront payment toward the purchase price of the car
ExplanationThe down payment is an upfront payment toward the car's purchase price.
#4
Which financial metric is used to evaluate the cost of borrowing on a car loan?
Interest rate
ExplanationInterest rate is used to evaluate borrowing costs on a car loan.
#5
What does 'Total Cost of Ownership' (TCO) for a car include?
All costs associated with owning and operating the vehicle
ExplanationTCO includes all costs related to owning and operating the vehicle.
#6
Which of the following factors should be considered when deciding between buying a new car and a used car?
Initial purchase price and long-term depreciation
ExplanationConsider initial price and long-term depreciation when choosing between new and used cars.
#7
Which of the following is NOT a factor affecting the interest rate on a car loan?
Car's color
ExplanationThe color of the car does not affect the interest rate on a loan.
#8
Which of the following factors typically affects the depreciation rate of a car?
Market demand and brand reputation
ExplanationDepreciation is influenced by market demand and brand reputation.
#9
In financial decision making for automobile ownership, what does the 'residual value' of a car represent?
The value of the car at the end of the lease or loan term
ExplanationResidual value represents the car's value at the end of the lease or loan term.
#10
What is 'gap insurance' in the context of automobile ownership?
Insurance coverage for the difference between a car's value and the amount owed on the car loan
ExplanationGap insurance covers the gap between a car's value and loan amount.
#11
What is the purpose of a 'balloon payment' in car financing?
To make a large payment at the end of the loan term
ExplanationA balloon payment is a large payment due at the end of the loan term.
#12
Which of the following statements about leasing a car is true?
The lessee has the option to customize the vehicle
ExplanationLessee can typically customize the leased vehicle.
#13
What is the 'residual value' of a car?
The value of the car at the end of a lease or loan term
ExplanationResidual value is the car's value at the end of a lease or loan.