Deck 8: The Home and Automobile Decision

Question 1

According to the Keown Book,what are some tips on making a complaint to a company?

Answer 1

A good strategy is to write a brief,concise letter describing the problem and stating exactly how you would like the matter to be resolved.Avoid writing an angry,sarcastic,or threatening letter.When possible,include copies of all documents regarding your problem;be sure to keep the originals.Maintain a record of whom you spoke to,along with dates and times of your contact.

Question 2

For most cars,the manufacturer's warranty extends through the first seven years of ownership or the first 70,000 miles,whichever comes first.

Answer 2

False

Question 3

The monthly payments on a 36-month lease on a car will often be smaller than the monthly payments on a 36-month loan to purchase the car.

Answer 3

True

Question 4

Evaluating whether you need or simply want a sun roof is an example of using the smart buying steps.

Question 5

Open-end leases are leases in which you return the vehicle at the end of the lease and you have no further responsibilities.

Question 6

Give at least six tips on smart buying.

Question 7

How does smart buying improve your standard of living?

Question 8

Smart buying means buying what you want first and figuring out how you'll pay for it later.

Question 9

Name the steps in smart buying.

Question 10

An automobile warranty provides coverage for the basic parts against manufacturer's defects for a set period of time or miles.

Question 11

Carrying credit cards can increase impulse purchasing.

Question 12

Leasing a car may make sense if you drive over 25,000 miles a year.

Question 13

________ is a publication that provides unbiased ratings and recommendations for a host of products and services

A) USA Consumer
B) Consumer Reports
C) People Magazine
D) Bloomberg Weekly

Question 14

The first step at the car dealership is to negotiate the best price that you can on the car that you need.

Question 15

Smart buying means enjoying the highest standard of living that you can based on your income and budget.

Question 16

According to Edmunds.com,a new car's value declines by 15 to 19 percent in the first minute of ownership after you leave the lot.

Question 17

When making a smart purchase you don't need to consider such charges as delivery fees,installation fees or service costs as these are already included in the purchase price.

Question 18

How can you benefit from following the smart buying steps?

A) Smart buying allows a higher standard of living because you make smarter purchases.
B) Smart buying allows you to buy what you want when you want it.
C) Smart buying helps you maintain your budget.
D) Both A and C are correct.

Question 19

A 48-month lease on a car with a 36-month manufacturer's warranty is a gamble.

Question 20

Automobile leasing is actually just a long-term rental agreement with the lessor.

Question 21

List the factors that go into a monthly lease payment and tell how the dollar value of a lease is calculated.

Question 22

Suppose that you were thinking about leasing a new vehicle.Which of the following should not be an important consideration?

A) I drive less than 15,000 miles annually.
B) I like to get a new car every few years.
C) I dislike the hassle of trading-in or selling cars.
D) It's the only way I can afford the vehicle that I want.
E) I dislike the hassle of maintenance.

Question 23

Which of the following factors plays a role in determining the monthly lease payment of a car?

A) The agreed-upon price of the vehicle
B) The length of the lease
C) Your down payment plus any trade-in allowance or rebate
D) The value of the vehicle at the end of the lease
E) All of the above

Question 24

Rob Roy is toying with the idea of buying a used car every three years instead of leasing or buying a new one.Assuming he can find a one-owner with low miles in good condition,what advantages might he enjoy?

Question 25

You have been having significant problems with your new car.Every time you turn around something is breaking or not working properly.Fortunately,the "lemon laws" are there to help.Which of the following is not one of the criteria for application of the lemon laws?

A) You have made at least four attempts to solve the problem.
B) Your car has been out of service for at least 30 days during the first year after purchase.
C) You have under 12,000 miles on the car.
D) You must return the vehicle to the original dealership.

Question 26

Suppose that you are at the end of your automobile lease.The leasing company has just informed you that the car's market value is greater than its residual value and they will be sending you a refund.What type of lease did you have?

A) Closed-end lease
B) Open-end lease
C) Walk-away lease
D) Residual lease
E) None of the above

Question 27

Candice is purchasing a new Jeep.She has the price negotiated down to what she thought was the lowest possible price until she heard that her Jeep has a holdback amount of 3%.Is it fair for Candice to ask the dealership to take the holdback amount off her final sales price?

A) Absolutely, this would decrease the mark up price of the Jeep and save Candice additional dollars.
B) No. The dealership would most likely lose money on the sale.

Question 28

What kind of valuable information can you find online at websites such as Edmunds.com or Autosite.com concerning smart buying for automobiles?

A) The dealer cost and dealer holdback for the automobile you are interested in.
B) The trade-in value on your current automobile.
C) The final price you will pay for the automobile at the dealership.
D) Only A and B are correct.
E) All of the above are correct.

Question 29

You disagree with Ed "Shifty" Smith,a car salesperson,on the price of an open-end lease.He says the depreciation charge is only $6,000.What is the actual depreciation charge for a car now worth $23,000 that is expected to drop in value to $15,000 in two years?

A) $7,000
B) $7,500
C) $8,000
D) $11,500
E) $15,500

Question 30

Over the past decade,the number of new car sales are down and the number of new car leases are up.What is probably the main reason why this is true?

A) The salesman makes a higher commission when cars are leased.
B) The manufacturers prefer it when people lease instead of purchase.
C) New cars are getting so expensive that the average person can't afford to buy them.
D) Both A and B are correct.

Question 31

Abraham is buying a new truck.The sale price for the truck is $23,410.His bank is loaning him the money at an APR of 6.5 for 5 years.How much will Abraham's monthly truck payment be?

A) $229.36
B) $375.88
C) $307.65
D) $402.35
E) $458.04

Question 32

In auto sales,a ________ is an amount of money,generally in the 2% to 3% range,that the manufacturer gives the dealer for selling an automobile.

A) holdback
B) rebate
C) kickback
D) markup
E) none of the above

Question 33

Congratulations! You have just agreed on the final price for your new car and now you have to finance the purchase.The negotiated price of the new car is $18,500 and you will receive $5,500 for your trade-in.What will your monthly payment be on a 48-month loan with a 7% APR?

A) $281.25
B) $311.30
C) $385.42
D) $443.01

Question 34

Describe the keys to obtaining a "good" lease.

Question 35

Billy has chosen to purchase a new vehicle.The vehicle costs $15,000.His APR is 10% and he will be financing the vehicle for 36 months.How much will Billy pay each month for his new vehicle?

A) $484.01
B) $296.35
C) $312.66
D) $405.29
E) $496.33

Question 36

If you are considering purchasing a used car you should

A) do some research so you'll know a fair price for the vehicle you're looking for.
B) ask questions about the mechanical history of the car, including whether it has been in any accidents.
C) have the car inspected by a mechanic before you purchase it.
D) all of the above

Question 37

List the four steps in the automobile decision.

Question 38

Stretching a car loan from 48 months to 60 months means the car will end up costing you more when you have paid in full.

Question 39

Another name for a closed-end lease is a(n)

A) take-out lease.
B) walk-away lease.
C) end-purchase lease.
D) terminal lease.
E) none of the above.

Question 40

Stretching a car loan from 48 months to 60 months means the car will end up resulting in a smaller monthly payment.

Question 41

The common areas in a condominium complex may include swimming pools,parking lots,and grounds.

Question 42

Name six factors that will determine your monthly lease payment.

Question 43

A co-op is an apartment building owned by a corporation where residents of the building are stock holders.When you buy into a co-op,you buy shares that reflect the dollar value of your space.The larger and more desirable the space you want requires purchase of more shares.

Question 44

A down payment is the initial buyer's equity in the asset being purchased.

Question 45

A condominium is a good choice of housing for someone seeking an affordable,low-maintenance situation with some shared amenities.

Question 46

If the roof of your condominium building needs expensive repairs,then the condominium board will pay for repairs at no expense to you.

Question 47

Because a co-op is technically not a "home" it does not charge a homeowner's fee.

Question 48

What are the basic financing options when considering a new vehicle?

Question 49

The Internet can help you research neighborhoods and find a community in which you'd like to live.

Question 50

Bridgette Rojeau has found a beautiful late model used car on a dealer's lot.It is just what she has always wanted.Give her seven tips on buying this dream car.

Question 51

Why is it that you should not tell the salesperson what you want your monthly payment to be before you negotiate the final price on the car?

Question 52

An assessment is a voluntary contribution by the condominium owners.

Question 53

Leasing a car may make sense for some people but there are disadvantages to leasing.What are the disadvantages to leasing a car verses purchasing the car outright?

Question 54

The typical down payment is 20% for traditional mortgage loans.

Question 55

Write a paragraph giving at least five important tips on buying a new car.

Question 56

For many consumers,a good school district is an important consideration when purchasing a home.

Question 57

Special assessments are fees that can be charged to cooperative shareholders and condominium owners to cover large maintenance and repair items.

Question 58

If you are the type of person who wants complete control over the style and decoration of your home,then a condominium or cooperative would be an appropriate housing decision for you.

Question 59

An appraisal is an estimate of what your home and property are worth.

Question 60

A co-op would be a wise choice for a consumer who wishes to pay no property taxes.

Question 61

An appraisal is a typical but not required part of the mortgage approval process.

Question 62

Which one of the following is not a key to finding housing that fits your needs?

A) Location
B) Deciding what features you are looking for
C) Present needs
D) Insurance costs
E) Future needs

Question 63

PITI stands for the total of your monthly principal,income,taxes,and insurance.

Question 64

What would be the best housing choice for a young family with children?

A) A home in a questionable school district.
B) A condominium that caters to young adults with active lifestyles.
C) A co-op with little privacy.
D) A house in a neighborhood with families that have children.

Question 65

Private mortgage insurance typically is not needed with a down payment of 20% or larger.Why?

A) Not true, all mortgage loans require PMI.
B) Buyers who have large down payments don't choose the extra insurance.
C) Buyers who invest large down payments are more motivated to make their mortgage payments.
D) All of the above
E) None of the above

Question 66

In many states rental deposits are to be kept in a bank account separate from the landlord's general funds.

Question 67

What drawbacks might a co-op have over a house for a family of eight who are relocating to a new area and need to purchase a home?

A) More expensive to purchase
B) More expensive to operate and maintain
C) Less freedom to make changes and less privacy
D) No ownership of shares in the corporation

Question 68

A title search fee is paid to an attorney or title company for searching ownership records to make sure the person selling you the property really owns it.

Question 69

Jackie is considering obtaining a mortgage of $333,000.A lower APR is available,but she must pay 1.75 points to buy the rate down.How much must Jackie pay in dollars?

A) $1,357
B) $3,300
C) $5,828
D) $8,333

Question 70

A mortgage with a 20% down payment will have a higher APR than one with less than 20% down.

Question 71

Which should you consider when house hunting?

A) The selling price
B) The neighborhood
C) The school district
D) All of the above

Question 72

A mortgage for less than 80% of the appraised value of the home will not require PMI insurance because they default less often.

Question 73

In evaluating your financial history,lenders generally focus on which of the following?

A) Your income
B) Your credit report
C) Your FICO score
D) All of the above

Question 74

PITI stands for the total of your monthly

A) principal, income, taxes, and insurance.
B) principal, interest, taxes, and insurance.
C) principal, interest, taxes, and income.
D) premiums, interest, taxes, and insurance.

Question 75

When following smart buying to purchase a home you should

A) create a budget and determine what PITI you can afford.
B) check out your FICO score and get a copy of your credit report.
C) look at your overall financial plan to determine how big a loan you should take on.
D) determine how much of a down payment you can afford.
E) all of the above.

Question 76

Which of the following is not an advantage of living in a condo?

A) Limited maintenance
B) Building equity for resale and investment
C) Direct ownership of a specific unit
D) Freedom from neighbors

Question 77

It's advisable to always take the biggest loan that a lender will give you.

Question 78

Which of the following housing alternatives puts the responsibility for maintenance and repairs on the occupant?

A) Home ownership
B) A co-op
C) A condo
D) A rental unit

Question 79

You,not your lender,should determine the amount you want to borrow for a mortgage.

Question 80

A loan origination fee is a fee paid to the lender,generally in the $1,200 to $1,300 range,and covers some of their costs of processing and finalizing the loan.