QuestionQuestion 8 (5 points)
Title:AlgwFin-U4-Test-Std8-25
The fact that you will need a down payment in either the form of a trade-in or cash is considered a "con" for which method of acquiring a new vehicle?
a financing
b lease
c cash
d none of these
Studdy Solution
STEP 1
What is this asking?
Which way of getting a car needs a down payment: financing, leasing, or buying with cash?
Watch out!
Don't mix up *financing* and *leasing*!
They both involve monthly payments, but they're totally different.
STEP 2
1. Financing
2. Leasing
3. Cash
STEP 3
When you **finance** a car, you're essentially taking out a loan to pay for it.
Think of it like borrowing money to buy a house!
STEP 4
You typically make a **down payment**, a chunk of money upfront, to reduce the loan amount.
Then, you pay off the rest of the loan plus interest in monthly installments.
STEP 5
**Leasing** a car is more like renting.
You pay a monthly fee to drive the car for a specific period, usually a few years.
STEP 6
You often have to make an **initial payment** when you lease, similar to a down payment when financing.
This payment covers things like fees and the first month's lease payment.
STEP 7
Buying a car with **cash** is the most straightforward option.
You pay the full price upfront, no loans, no monthly payments.
STEP 8
Since you're paying the entire amount at once, there's no need for a **down payment**.
You're already paying *everything*!
STEP 9
Both **financing (a)** and **leasing (b)** usually require a down payment or an initial payment.
Buying with **cash (c)** does *not* require a down payment.
So the answer is both **a** and **b**.
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