Car Ownership
Calculating depreciation: If you buy a new car for $50,000 and it depreciates 25% the first year and 20% the second year, what is your car worth at the end of the second year?
(6-1)
a. $23,000
b. $24,750
c. $30,000
d. $37,500
c. $30,000
How much should you spend on a car? (6-2)
a. No more than 5% of your paycheck
b. Less than 6-10% of your paycheck.
c. Less than 15-20% of your paycheck.
d. You are OK spending 20-30% of your paycheck.
c. Less than 15-20% of your paycheck.
It is often better to rent instead of buying a home when you only plan living there for?
(6-3)
a. 3 yrs or less.
b. 4-5 years
c. 6-7 yrs.
d. It is always better to buy a home instead of renting.
a. 3 yrs or less.
The majority of Americans purchase their home with a ___ year mortgage.
(6-4)
a. 10
b. 15
c. 20
d. 30
d. 30
Fuel cost: If you drive 900 miles per month, your car gets 27 miles per gallon (MPG), and fuel costs $2.83 per gallon; how much will you spend PER YEAR on fuel?
(6-1)
a. $94.33
b. $1,134.55
c. $1,132.00
d. $6,769.23
c. $1,132.00
What type of vehicle would typically have higher repair costs on a yearly basis?
(6-2)
a. New car (owned)
b. New car (leased)
c. Used car (owned)
d. Certified Pre-owned car (owned)
c. Used car (owned)
Jill’s income is $7,000/mo and she currently has $900/mo in other debt payments, how much monthly payment towards a home loan would the bank likely be willing to issue as a mortgage for a home purchase? (6-3)
a. $880.00
b. $1,360.00
c. $1,620.00
d. $2,160.00
c. $1,620.00
The primary advantage of this loan is that borrowers can receive 100% financing for the purchase of a home. (6-4)
a. Reverse Mortgage
b. Conventional Mortgage
c. VA Loan
d. FHA Loan
c. VA Loan
How much does a new car depreciate in the first year?
(6-1)
a. 10%
b. 17.50%
c. 25%
d. 30%
c. 25%
When buying a new car, you typically have higher
(6-2)
a. Maintenance costs
b. Repair costs
c. Fuel costs
d. Depreciation (indirect cost)
d. Depreciation (indirect cost)
If you don’t put 20% as a down payment on a home purchase, the lender will require you to carry _____ to protect themselves financially. (6-3)
a. Property Insurance
b. Life Insurance
c. Private Mortgage Insurance
d. Liability Insurance
c. Private Mortgage Insurance
This type of mortgage allows homeowners who are 62 or older to borrow from their home's equity? (6-4)
a. Fixed Rate Mortgage of 15 years only
b. Balloon Mortgage
c. Reverse Mortgage
d. Adjustable Rate Mortgage
c. Reverse Mortgage
Karina was thinking about buying a new car and asked you what the biggest cost would be? Since you aced finance class, you tell her the biggest cost is?
(6-1)
a. Depreciation
b. Fuel
c. Insurance
d. Interest
a. Depreciation
Camden is looking at buying a condo downtown but does not want to pay PMI (Private Mortgage Insurance). How much of a down payment does Camden need so he does not need to pay PMI?
(6-3)
a. 10%
b. 15%
c. 20%
d. It does not matter, everyone that buys a home must pay PMI.
c. 20%
What is true about a variable interest rate mortgage?
(6-4)
a. The interest rate varies during the length of the loan
b. Can also be called an ARM (Adjustable Rate Mortgage)
c. Both A & B
d. None of the above.
c. Both A & B
In the state of Iowa, how old must a car be for the registration to be only $50 + the weight surcharge?
a. 7 yrs
b. 9 yrs
c. 10 yrs
d. 12 yrs.
d. 12 yrs.
How are property taxes and home insurance typically paid for when you have a mortgage?
a. Through a separate utility company.
b. Through an escrow account
c. Through an FDA equity payment
d. Through your real estate agent
b. Through an escrow account
Your home mortgage payment typically includes all of the following except…
(6-4)
a. Principal and interest payment
b. Property Insurance
c. Property Tax
d. Sales Tax
d. Sales Tax