Ramsey - Chapter 4 - Lesson 5 - Quiz

What is the best way to own a car according to the lesson?

• Leasing a car

• Taking a car loan

• Paying cash for a car

• Renting a car

What are the two major ways to finance a car mentioned in the text?

• Direct financing and leasing

• Credit cards and cash

• Personal loans and savings

• Mortgages and bonds

What does the 'term' of a car loan refer to?

• The interest rate

• The total loan amount

• The amount of time to pay back the loan

• The car's warranty period

What happens to your payments if you have a longer loan term?

• Payments are higher, but you pay less interest

• Payments are lower, but you pay more interest

• Payments stay the same

• Payments are lower, and you pay less interest

Why is direct financing not considered a good idea according to the text?

• It has high interest rates

• It puts you into years of debt

• It requires a large down payment

• It has hidden fees

What is 'depreciation' in the context of car loans?

• The increase in car value over time

• The decrease in car value over time

• The interest paid on a loan

• The principal amount of a loan

What does 'negative equity' mean in car financing?

• Owing more on the loan than the car is worth

• Having a positive credit score

• Paying off the loan early

• Having a low interest rate

What does "being upside down" on a car loan mean?

• Owing more than what the car is worth

• Having a car with a high resale value

• Paying off a car loan early

• Leasing a car instead of buying

What happens at the end of a car lease if you don't buy the car?

• You don't have a car

• You own the car

• You get a refund

• You pay less in taxes

Why might leasing a car seem like a great idea?

• Lower monthly payments

• Ownership of the car

• No mileage limits

• No maintenance required