buying car basics
What does MSRP stand for?
Manufacturer’s Suggested Retail Price
What is a down payment?
Money paid upfront toward the car purchase
What is a test drive?
Driving the car before buying it
What document proves ownership of a vehicle?
The title
Sarah can afford a $350 monthly payment but ignores insurance costs. What problem might happen?
She may exceed her budget
What is the benefit of buying a used car instead of a new car?
Lower price and slower depreciation
What does APR mean in a car loan?
Annual Percentage Rate
What is gap insurance?
Insurance covering the difference between the loan balance and car value
Why should you compare prices at different dealerships?
To find the best deal
Jake buys a sports car with high gas costs. What expense did he underestimate?
Fuel costs
Why should buyers know the total cost instead of only the monthly payment?
Low monthly payments may hide high total costs
Why can a longer loan term cost more overall?
More interest is paid over time
Why is pre-approval from a bank helpful before shopping?
It helps buyers know their budget and negotiate better
What credit score factor affects car loan interest rates?
Higher credit scores usually get lower rates
Mia is offered a 7-year loan with low monthly payments. What should she be cautious about?
Paying more interest overall
What is certified pre-owned (CPO)?
A used car inspected and backed by a manufacturer warranty
What is negative equity in a car loan?
Owing more than the car is worth
Why is fuel economy important when buying a car?
It affects long-term gas costs
Why should someone research reliability ratings before buying?
Reliable cars usually cost less to repair
Chris trades in a car while still owing money on it. What could happen to the new loan?
Old debt may be added to the new loan
Why is negotiating the “out-the-door price” important?
It includes all fees and shows the true total cost
What is the danger of rolling old loan debt into a new loan?
It increases total debt and payments
What factors affect the total cost of owning a car besides the loan?
Insurance, gas, maintenance, taxes, and repairs
Why should buyers avoid emotional decisions at dealerships?
Emotions can lead to overspending
A buyer has a low credit score. How could that affect the total cost of the car?
Higher interest rates increase total repayment