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Move your auto finance knowledge into overdrive

Overview

Published: 06/21/2016

by Arielle Duke

Answer: C and D. You should also be able to reduce your negative equity by avoiding multiple trade-ins.

How much do you know about car loans? Before you start the car buying process, take this quiz to get a better understanding of the questions you will face:

1. A loan offered through a car dealership is always the best financing option for consumers:A.) true

B.) false

False: You may get a competitive loan through a car dealer, but it might not always be the best loan you could get. It is up to you to shop around and compare the terms and conditions offered by several lenders, including your own bank.

2. The following factors will impact the size of your regular car payment:

A.) the down payment

B.) the length of the car loan term

C.) the price of the car

D.) the interest rate

E.) all of the above

Answer: E

3. What is negative equity?

A.) a lender's term for rejecting a car loan application

B.) a situation in which you owe more on your car than the vehicle is actually worth

C.) the former financial situation of some automotive companies

Answer: B

4. How can you reduce the period you're in “negative equity”?

A.) You can't – all you can do is make sure you make your regular car payments.

B.) Choose a long-term loan instead of a short one.

C.) Make a larger down payment.

D.) Buy a car you can reasonably afford and opt for the shortest loan term possible.

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