A good credit score is an important factor when buying a car because it allows you to (1) obtain better or less attractive financing terms, and (2) afford a more or less expensive or better vehicle for the same loan amount.

Scenario: You are in the market for a new car. You do not have a trade-in, but you have saved $3,000 toward a down payment. You currently earn $3,750.00 gross monthly income, of which 28% is withheld for various deductions. You have heard of the 20% rule of thumb, but want to limit your payments to no more than 18% of your net monthly income because of other debt commitments. currently have a credit score of 685 . You expect to drive the car an average 15,000 miles per year. You're considering purchasing a used-rather than new-car. This strategy offers several advantages. Which of the following is not an advantage of purchasing a used car? The reduced down payment required for the purchase A lack of knowledge and confidence in the mechanical condition of the car The reduced price of the automobile Avoidance of the vehicle's significant decrease in value due to depreciation Which of the following will directly affect the final cost of a new car if you elect to purchase the vehicle? Check all that apply. The number of accidents and traffic citations on your driving record for the past three years The extent to which you dress up when you negotiate the purchase The amount of the trade-in on an existing vehicle (if applicable) The color the vehicle The period or term of any loan used to finance the purchase Alternatively, after seeing several television commercials suggesting the benefits of leasing a new automobile, you've started thinking about the phenomenon of leasing. Which of the following statements regarding leasing is true? Check all that apply. Leasing can result in lower monthly payments than would be incurred if you purchased the vehicle. If you select to use a closed-end lease, then you'll be free from any final payment. That's why they call it a walkaway lease. The lessee actually owns the vehicle during the lease period. Leases work best for people who want to drive a vehicle for years and years, and drive at least 30,000 miles every year. If you use an open-end lease, you'll be required to pay the difference between the vehicle's projected residual value and its actual market value. A lease payment is based on four variables. Which of the following is not one of these variables? The closed-end premium The money, or lease, factor Any down payment, rebate, or trade-in value made at the beginning of the transaction The vehicle's residual value Why would the credit score used on a vehicle loan differ from that used to purchase a home or furniture? Because it allows credit bureaus to sell another type of credit score to their business customers. Because lenders making vehicle loans want to rely on a credit score that places greater emphasis on a borrower's past experiences repaying vehicle loans. Complete the following table to determine your desired maximum monthly payment. (Round your answers to the two decimal places.) You have decided to purchase a new car and have negotiated the price. A four-year loan is resulting in payments of $586.00 per month. How might you get your monthly payment down to your desired monthly goal? Check all that apply. Shop for a loan with a lower interest rate Shop for a loan with a higher interest rate Shorten the term of the loan from four to three years Increase the amount of your down payment A good credit score is an important factor when buying a car because it allows you to (1) obtain financing terms, and (2) afford a expensive or better vehicle for the same loan amount