Understanding Car Affordability and Ownership Costs

What is the main reason for understanding the three key numbers before buying a car?

• To get a loan from the bank

• To avoid financial traps and manage payments

• To impress the car dealer

• To ensure you buy the most expensive car

According to the 35% rule, what is the maximum car price for someone earning $80,000 annually?

• $14,000

• $52,500

• $28,000

• $80,000

What percentage of your gross income should your monthly car payment not exceed according to the 10% rule?

• 15%

• 10%

• 20%

• 5%

Which of the following is NOT considered in the true cost to own a car?

• Monthly salary

• Depreciation

• Fuel

• Insurance

Why is depreciation considered a hidden cost in car ownership?

• It increases fuel efficiency

• It is covered by insurance

• It affects the car's resale value

• It is paid monthly

What is a common tactic dealers use to make monthly payments seem more affordable?

• Reducing the car's price

• Extending the loan term

• Increasing the interest rate

• Offering free maintenance

How can a dealer manipulate a car deal if you specify a desired monthly payment?

• By lowering the interest rate

• By reducing the car's price

• By adding unnecessary extras

• By offering a cash discount

Why should you avoid telling a dealer you are paying cash upfront?

• It might lead to a higher price

• Cash payments are not accepted

• Dealers prefer financing for bonuses

• It complicates the paperwork

What is a suggested strategy if you have cash but want to avoid dealer issues?

• Pay in full immediately

• Finance and pay off early

• Negotiate a higher price

• Avoid buying the car

What should you check for when planning to pay off a financed car early?

• Loan term

• Car's color

• Dealer's bonus

• Prepayment penalties