PF: Chapter 4 Lesson 5 The Truth About Car Loans

What is the main disadvantage of financing a car?

• You have to pay interest on the loan

• You have to pay taxes and fees

• You have to make monthly payments

• You have to maintain the car

What are the three main factors that determine a car loan payment?

• Principal, interest, and term

• Interest, taxes, and fees

• Term, maintenance, and depreciation

• Depreciation, principal, and taxes

Why is paying cash for a car considered the best option?

• It allows you to upgrade your car easily

• It helps you avoid paying interest

• It gives you a better credit score

• It allows you to negotiate a better price

What happens if you finance a car and it depreciates quickly?

• You will have negative equity

• You will have to pay excessive wear fees

• You will have to pay a penalty for going over the mileage cap

• You will have to pay a fee to turn the car back in

What is the average length of a new car loan?

• 60 months

• 72 months

• 48 months

• 36 months

What is the main disadvantage of leasing a car?

• You have to pay a rental charge

• You have to pay taxes and fees

• You don't own the car at the end of the lease

• You have to maintain the car

What is the purpose of a lease agreement?

• To help cover the depreciation of the vehicle

• To allow you to buy the car at the end of the lease

• To provide a lower monthly payment

• To avoid paying interest

What happens if you go over the mileage cap in a lease agreement?

• You have to pay a penalty

• You have to pay excessive wear fees

• You have to pay a fee to turn the car back in

• You have to maintain the car

What is the Third Foundation mentioned in the text?

• Paying cash for your car

• Financing a car with a loan

• Leasing a car

• Saving up for a car

Who is the target audience for this quiz?

• College graduates

• High school students

• Car dealers

• Financial experts