Planning for Living and Leisure Test Review

The equity that you build by making mortgage payments is:

• a home loan where the real estate is collateral

• the value of the home after the mortgage debt is subtracted

• purchasing a housing unit as rental property

• the amount of money paid on the home at the time of purchase

Alyssa is considering purchasing a car and wants to be sure she can afford to drive it during the school year when she doesn’t have a job. Which expense WOULD NOT be considered part of the total transportation expenses?

• fuel

• parking

• depreciation

• auto payment

Brett borrowed money to purchase a vehicle without making a down payment and now he owes more on the vehicle than it is worth. This situation is referred to as:

• being upside down on the loan

• depreciation

• a hidden cost

• leasing

Melissa needs a vehicle and is considering leasing one. This means:

• She would be purchasing the vehicle by making payments over time.

• She would be renting the vehicle by making payments over time, although the vehicle title would remain with the lease grantor.

• Her depreciation costs will likely be higher.

What should your vehicle monthly payments be?

• 30 percent of your income

• None are correct

• No more than 20 percent of your income

• 35 percent of your income

What are the costs of owning a vehicle?

• Maintenance

• Fuel

• Auto insurance

• All of these

Which of the following is a benefit of owning a home rather than renting one?

• Short term commitment

• Tax benefits

• Lower maintenance costs

• Lower up front costs

What does the term “discretionary income” refer to?

• Income used for essential expenses

• Income available for saving or spending on non-essential items

• Income from investments

• Income after taxes

What could be a downside of purchasing a car instead of leasing?

• Equity build-up over time

• Depreciation of value

• Consistent fixed monthly payments

• Flexibility with mileage

Renting a home does not require which of the following?

• Credit check

• Application

• Security Deposit

• Mortgage