Car Ads
What does MSRP stand for?
Manufacturer’s Suggested Retail Price
What percentage down payment is typical when buying a car?
10–20%
What is depreciation?
he loss of value of an asset over time
What does ADB stand for?
Average Daily Balance
If a $24,000 car is financed at 0% for 36 months, what’s the monthly payment?
$667 per month
If a car has an MSRP of $28,000 but sells for $26,500, how much less is the selling price?
$1,500 less
What’s one benefit of leasing a car?
Lower monthly payments or a new car every few years
What happens to a car’s value when you drive it off the lot?
It immediately decreases
What is the ADB used to calculate?
Interest charges on credit cards and loans
If that same car ($24000) had 5% APR for 36 months, what’s the monthly payment?
About $720 per month
What is one trick dealers use in fine print?
Requiring a down payment, mileage limits, or good credit requirement
What’s one downside of leasing a car?
No ownership, mileage limits, or extra fees for damage
List two factors that cause depreciation.
Age, mileage, condition, new models, or market demand
formula for ADB
ADB = (Sum of daily balances) ÷ (Number of days in billing period)
If your car depreciates 25% the first year, how much value is lost on a $20,000 car?
$5000
Why can’t you usually take both a rebate and 0% financing?
Because you can only choose one offer — not both
If you finance $25,000 at 6% APR for 5 years, about how much do you pay total?
$28,980
If a car costs $30,000 and loses 40% of its value in 3 years, what is it worth then?
$18,000
If your ADB is $600 and APR is 18%, how much interest is charged that month?
$9
If your ADB is $900 and APR is 12%, what’s your monthly interest charge?
$9
A Tampa dealer lists a car for $22,995 but adds $1,000 down, $599 dealer fee, and $1,200 in taxes. What’s the real cost?
$24,794
A $30,000 car loses 20% value per year. What is it worth after 3 years?
$15,360
Why is a car considered a depreciating asset?
Because its value decreases instead of increasing like an investment
How can you lower your ADB and pay less interest?
Make payments earlier in the billing cycle
A $30,000 car loses 20% the first year and 15% the second year. What is it worth after 2 years?
$20,400