WorksheetsChapter 4, Lesson 5
Total questions: 20
Worksheet time: 10mins
Which statement best explains the main idea presented about buying a car?
Using a car loan is the smartest way to buy a car.
Buying a car with cash lets you own it without debt or payments.
Leasing a car builds your credit faster than paying cash.
A newer car always shows you are successful.
According to the text, what is a common myth about cars?
Older cars prove you are broke.
New cars never lose value.
Your car is a status symbol that shows success.
Car loans have no interest.
Which practice does the "Words of Wisdom" section warn against?
Paying interest on something that loses value every month.
Paying cash for items you need.
Comparing prices before buying.
Saving up for major purchases.
What are the two major ways to finance a car mentioned in the passage?
Cash and credit cards.
Direct financing and leasing.
Rent-to-own and layaway.
Dealer rebates and trade-ins.
In the context of a car loan, which term correctly matches its definition: the total amount of the loan including the cost of the car, taxes, and fees?
Interest
Term
Principal
Depreciation
Which statement about loan term is accurate based on the passage?
A longer term lowers monthly payments but increases total interest over time.
A longer term raises monthly payments and reduces interest.
The term only affects the principal, not interest.
Short terms always cost more overall than long terms.
Amanda financed a $25,000 car at 8% interest for six years. About how much total did she pay after 72 payments, and how much of that was interest?
25,000total; 0 interest
31,500total;about 6,500 interest
28,000total;about 3,000 interest
33,000total;about 8,000 interest
What monthly payment did Amanda take on by financing, and for how long?
$325 per month for three years
$438 per month for six years
$500 per month for four years
$275 per month for five years
According to the passage, why is leasing described as the most expensive way to drive a car?
You own the car at the end without extra costs
Lease payments cover depreciation plus rental charges, taxes, and fees
Dealers offer large discounts that reduce total cost
Leases automatically include free maintenance and repairs
Which statement best explains what happens at the end of a typical three-year lease if you don’t pay more?
You keep the car because you’ve paid for it
You must return the car since you don’t own it
You receive a refund for depreciation
You automatically extend the lease for another year
What is a mileage cap in a lease agreement?
A limit on how much you can spend on gas each month
A maximum number of miles you can drive before penalties apply
A fee charged for cleaning the car at turn-in
A warranty that covers excessive wear
Which cost can be charged when you return a leased car that isn’t kept in great condition?
Overage tax fee
Dealer discount fee
Excessive wear fee
Depreciation rebate
Why might monthly lease payments seem attractive compared to a car loan, even though leasing is costly overall?
Lease payments are often lower each month than loan payments
Leases include free mileage with no cap
Leasing guarantees ownership after two years
Leases eliminate all dealer profits
According to the section, what is one main benefit of paying cash for your car? Choose the best answer.
You can avoid a large monthly car payment
Dealers always give you a free warranty
The car will keep its new-car smell longer
You will never need to upgrade vehicles
Which term is defined as the original amount of a loan—the total amount borrowed before interest?
Interest
Principal
Term
Depreciation
Pick the definition that correctly matches Interest.
The amount of time, in months, that payments are made
The original amount borrowed before any fees
The additional cost a lender charges for borrowing their money
The loss of value of an asset over time
A car’s value drops over several years. Which financial term best describes this change?
Negative equity
Depreciation
Principal
Term
When does negative equity occur in car ownership?
When the value of the car rises above the loan balance
When the value of the car falls below what is owed on it
When the loan has no interest charges
When monthly payments are shorter than 12 months
Which statement about car loans is supported by the facts in the section?
Most new-car loans last less than one year
Over 70% of new-car loans are for more than 60 months
The average new-car loan is exactly 60 months
Only adults report confidence in saving money
Choose the best explanation of Term in the context of a loan.
The price of the car after discounts
The amount of time, in months, you will be making payments
The total amount borrowed before interest
The amount the car loses in value each year
