AnswersFinancial MathBuying vs Leasing a Car

Buying vs Leasing a Car — Quiz Answers

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1
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Keila is considering leasing a car that has a sticker price of $⁢25,000 The lease agreement states that she must pay 10% of the sticker price as a down payment. How much will Keila have to pay upfront?

A
2 dollars comma 500
B
2 dollars comma 000
C
3 dollars comma 500
D
3 dollars comma 000
2
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What is the residual value of a car?

A
the total cost of the car's maintenance
B
the cost of the car's insurance
C
the initial price minus the down payment made on the car
D
the value of the car at the end of the financing term
3

What factor could lead to additional costs at the end of a car lease term?

A
using the car's radio and air-conditioning
B
exceeding the mileage limit stated in the lease agreement
C
not refueling the car regularly
D
getting a promotion at your job
4

How does depreciation affect a car's residual value?

A
It has no effect on the residual value.
B
It stabilizes the car's market price.
C
It increases the residual value over time.
D
It reduces the residual value over time.
5

How can reading an amortization table benefit a potential car buyer?

A
It details the car's warranty coverage, specifying what repairs and services are included over time.
B
It reveals the car's performance metrics, including acceleration and fuel efficiency.
C
It catalogs the car's features and specifications, detailing everything from horsepower to tech amenities.
D
It outlines the distribution of payments toward interest and principal over the loan's duration.
6

Juliet leased a car with a monthly payment of $300 for 3 years. What is the total cost of the lease term?

A
$10,800
B
$9,000
C
$900
D
$11,000
7

A higher credit score could reduce a monthly lease payment by $50. How much would you save over a 2-year lease term?

A
$2,400
B
$1,000
C
$1,200
D
$100
8

Why is considering the down payment important when buying a car?

A
It improves the likelihood of receiving favorable terms on extended service plans.
B
It enhances the car's resale value by indicating a higher initial investment.
C
It decreases the overall loan amount, leading to lower monthly payments.
D
It increases eligibility for premium insurance packages at discounted rates.
9

Which option does a lessee typically have after the end of a lease term?

A
transfer the lease to another vehicle of a different model with no additional fees
B
lease a new car from the same dealer
C
buy the car for its residual value
D
extend the lease indefinitely with no additional costs
10

Makai wants to buy a new car and borrow $15,000 to finance it. The car dealership offers different annual interest rates based on the buyer's credit score. Credit score of 720 or higher: 3% annual interest rate Credit score between 690 and 719 : 5% annual interest rate Credit score between 660 and 689 : 7% annual interest rate Credit score below 660 : 10% annual interest rate Makai's credit score is 705 What will be the total amount of interest paid over a 4 -year loan period?

A
2 dollars comma 000
B
$3,000
C
4 dollars comma 000
D
1 dollars comma 200

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