Understanding Auto Loans and Interest

What is one of the primary benefits of a 0% APR auto loan?

• Lower monthly payments

• No interest cost over the loan term

• Longer loan term

• Higher loan amount

Tags

CCSS.7.RP.A.3

How does a higher credit score impact the interest rate on an auto loan?

• It increases the interest rate

• It decreases the interest rate

• It has no impact on the interest rate

• It doubles the interest rate

Tags

CCSS.7.RP.A.3

What is a potential drawback of a 0% APR auto loan?

• Higher monthly payments

• Limited availability to borrowers with excellent credit

• Increased interest costs

• Shorter loan terms

Tags

CCSS.7.RP.A.3

If a borrower has a low credit score, what is a likely consequence when applying for an auto loan?

• They will receive a 0% APR loan

• They will be offered a higher interest rate

• They will be denied a loan

• They will receive a longer loan term

Which of the following is true about the relationship between loan term and monthly payments?

• Longer loan terms result in higher monthly payments

• Shorter loan terms result in lower monthly payments

• Longer loan terms result in lower monthly payments

• Loan term does not affect monthly payments

Tags

CCSS.7.RP.A.3

Monica is comparing two loan options:

Option A - 6% APR for 48 months

Option B - 9.25% APR for 72 months

If Monica's goal is to pay less in interest, why is option B a bad choice?

• A higher APR will require you to pay more in interest over the life of the loan

• A higher APR will require you to pay less in interest over the life of the loan

• A longer term means you will pay on the loan longer, which increases the amount you pay in interest over time

• A longer terms means smaller monthly payments, which decreases the amount you pay in interest over time

Tags

CCSS.7.RP.A.3

Monica is comparing two loan options:

Option A - 6% APR for 48 months

Option B - 9.25% APR for 72 months

If Monica's goal is to pay less per month, why is option A a bad choice?

• Option A is a good choice because it has a lower APR, which always means a lower monthly payment

• A shorter term means you pay more in interest, which will increase your monthly payment

• A shorter terms means you are paying more towards your principal each month, which increases your monthly payment

• A lower APR means a larger monthly payment

Tags

CCSS.6.RP.A.3D

What is the impact of making a larger down payment on an auto loan?

• It increases the total interest paid

• It decreases the total interest paid

• It has no impact on the interest paid

• It increases the loan term

Tags

CCSS.7.RP.A.3

Payne takes out an auto loan with a principal of $22,000, APR of 0%, and a term of 48 months. How much will Payne pay in interest over the life of the loan?

Tags

CCSS.7.RP.A.3

Lindsay is buying a car for $46,000 and needs a 20% down payment in order to afford her monthly payments. How much money will Lindsay need for her down payment?

Tags

CCSS.6.RP.A.3C