Scenario: You are in the market for a new car. You do not have a trade-in, but you have saved $2,500 toward a down payment. You currently earn $3,000.00 gross monthly income, of which 30% is withheld for various deductions. You have heard of the 20% rule of thumb, but want to limit your payments to no more than 17% of your net monthly income because of other debt commitments. You currently have a credit score of 700. 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 price of the automobile The reduced down payment required for the purchase Avoidance of the vehicle's significant decrease in value due to depreciation A lack of knowledge and confidence in the mechanical condition of the car 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 amount of any rebate or incentives associated with the purchase of the new vehicle The amount of the trade-in on an existing vehicle (if applicable) The amount of the down payment The interest rate of any loan used to finance the purchase The final negotiated price of the vehicle 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 elect to purchase the vehicle at the end of the lease period, you'll pay the vehicle's residual cash value in the event of an closed end lease. 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 marke value. The lessee actually owns the vehicle during the lease period. 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. A lease payment is based on four variables. Which of the following is not one of these variables? The cost of the vehicle Any down payment, rebate, or trade-in value made at the beginning of the transaction The closed-end premium The vehicle's residual value Being upside down in a loan is the same as having: Negative equity A negative interest rate You have decided to purchase a new car and have negotiated the price. A four-year loan is resulting in payments of $457.00 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 higher interest rate Shorten the term of the loan from four to three years Decrease the amount of your down payment 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