Cwmc Module 5: Car Competency Test
This quiz is part of LFEInstitute's CWMC (Certified Workplace Money Coaching) course. It willtest yourproficiency in the Car Module (Module 5) of theprogram. The questions are allmultiple choice, and are designed to be a review of this Module. LetLFE knowwhen you've successfully completed this test and are ready to take the Associate Level (Level 1) Test.
Correct answers required for passing grade: 10/12
- 1.
If a woman owns a car with 80,000 miles that needs about $1,800 in repairs to put it in good running order, you should recommend that she:
- A.
Fix the problems right now and keep the car
- B.
Buy a used car with lower mileage
- C.
Purchase a new car with extended warranties
- D.
All of the above would be good alternatives
- E.
None of the above. Our role is not to recommend, but to provide education on the alternatives that may be available.
Correct Answer
E. None of the above. Our role is not to recommend, but to provide education on the alternatives that may be available.Explanation
The correct answer is "None of the above. Our role is not to recommend, but to provide education on the alternatives that may be available." This answer is correct because the question states that the woman owns a car with 80,000 miles that needs repairs. However, the answer options suggest different alternatives such as fixing the car, buying a used car, or purchasing a new car. The correct answer states that the role is not to recommend any specific option, but rather to provide education on the available alternatives.Rate this question:
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- 2.
Where is the best place to find the lowest price on a good used car?
- A.
Google the model you want to buy
- B.
Www.AutoTrader.com
- C.
Www.craigslist.com
- D.
Local newspaper and/or local auto dealerships
- E.
Shop and compare prices at all of the above sources
Correct Answer
E. Shop and compare prices at all of the above sourcesExplanation
The best place to find the lowest price on a good used car is to shop and compare prices at all of the above sources. This means that instead of relying on just one source, such as Google, AutoTrader, Craigslist, or local dealerships, it is recommended to explore all of these options and compare the prices offered. By doing so, one can ensure that they are getting the best deal possible by considering all available options and making an informed decision based on the comparisons made.Rate this question:
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- 3.
With the current economy, employees will find the best bargains on which of the following type of cars?
- A.
New cars
- B.
Used cars
- C.
Hybrid models
- D.
All of the above will be at bargain prices
- E.
It depends on the needs of the employee whether an automobile is a bargain or not
Correct Answer
E. It depends on the needs of the employee whether an automobile is a bargain or notExplanation
The correct answer is "It depends on the needs of the employee whether an automobile is a bargain or not." This is because the term "bargain" is subjective and can vary for each individual. What may be considered a bargain for one employee may not be the same for another. The best deal for a car depends on factors such as budget, preferences, and specific needs of the employee. Therefore, it is not possible to determine a specific type of car that will be the best bargain for all employees.Rate this question:
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- 4.
Leasing a vehicle offers which of the following benefits?
- A.
The down payment is generally fairly low
- B.
You can walk away from the lease at any time; just turn in the vehicle in good condition
- C.
You will never have to pay for any repairs
- D.
You will own the car at the end of the lease
Correct Answer
A. The down payment is generally fairly lowExplanation
Leasing a vehicle offers the benefit of a generally low down payment. Unlike purchasing a car, where a high down payment is often required, leasing allows for a lower initial cost. This can be advantageous for individuals who may not have a large sum of money available upfront or prefer to allocate their funds elsewhere. Leasing also provides the flexibility to walk away from the lease at any time by simply returning the vehicle in good condition, without the long-term commitment of ownership.Rate this question:
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- 5.
The biggest financial traps for consumers who purchase a vehicle are: (check all that apply)
- A.
They pay more than the lowest price the seller was willing to sell it for
- B.
They negotiate monthly payment, but fail to negotiate interest rates and total price
- C.
They don't purchase an extended warranty package at the dealership; it's cheaper than adding it later
- D.
They don't trade in their car at the dealership where they'll get the best price for it
Correct Answer(s)
A. They pay more than the lowest price the seller was willing to sell it for
B. They negotiate monthly payment, but fail to negotiate interest rates and total priceExplanation
Consumers who purchase a vehicle can fall into financial traps by paying more than the lowest price the seller was willing to sell it for. This means that they could have potentially negotiated a lower price but failed to do so. Additionally, they may negotiate the monthly payment without considering the interest rates and total price, which can lead to higher overall costs. By not purchasing an extended warranty package at the dealership, they miss out on a cheaper option compared to adding it later. Lastly, if they don't trade in their car at the dealership where they can get the best price for it, they may lose out on potential value.Rate this question:
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- 6.
Currently, a hybrid is a good buy for which of the following reasons?
- A.
Hybrids are cheaper
- B.
Any extra cost paid for hybrids will be offset within two years in gas savings
- C.
Hybrids are safer to drive
- D.
Hybrids are more reliable than conventional automobiles
- E.
None of the above are true
Correct Answer
E. None of the above are trueExplanation
The given correct answer is "None of the above are true." This means that none of the reasons listed (hybrids being cheaper, gas savings, safer to drive, and more reliable) are valid reasons for why a hybrid is a good buy currently. The question implies that there may be other reasons not listed that could make a hybrid a good buy, but based on the given options, none of them are accurate.Rate this question:
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- 7.
The best reason NOT to purchase a car right now is:
- A.
The auto industry is struggling, so they may not be in business in the future, which will void the warranties
- B.
There aren't many good deals on automobiles right now
- C.
It's smart in this economy to avoid taking on any additional debt
- D.
It's the wrong time of year
- E.
None of the above; it's a great time to purchase a car
Correct Answer
C. It's smart in this economy to avoid taking on any additional debtExplanation
In the given options, the best reason not to purchase a car right now is that it's smart in this economy to avoid taking on any additional debt. This suggests that with the current economic situation, it is advisable to be cautious and avoid adding more financial obligations, such as car loans, which can increase debt burden.Rate this question:
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- 8.
A businessman who takes good care of his vehicle, only puts 10,000 miles per year on it, and wants to drive a new car every other year will find the best option is to:
- A.
Rent a car
- B.
Lease a car
- C.
Buy a car and trade in his vehicle at the dealership every two years
- D.
Buy a car and sell his vehicle on his own every two years
Correct Answer
B. Lease a carExplanation
Leasing a car would be the best option for a businessman who wants to drive a new car every other year. Leasing allows the individual to have a new car without the commitment of ownership. Since the businessman only puts 10,000 miles per year on the vehicle, leasing would be more cost-effective compared to buying and trading in or selling the car every two years. Leasing also provides the advantage of lower monthly payments and the ability to drive a more expensive car for a lower cost.Rate this question:
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- 9.
Which of the following sets of items are negotiable when purchasing a car? (check two)
- A.
Warranty, service contract, interest rate
- B.
Price, terms, service contract
- C.
Interest rate, down payment, trade-in value
- D.
Down payment, warranty, price
- E.
Payments, proof of insurance, terms
Correct Answer(s)
B. Price, terms, service contract
C. Interest rate, down payment, trade-in valueExplanation
The correct answer is "Price, terms, service contract" and "Interest rate, down payment, trade-in value". These sets of items are negotiable when purchasing a car because the price of the car can be negotiated, the terms of the financing or lease agreement can be negotiated, and the inclusion or terms of a service contract can be negotiated. Additionally, the interest rate on the financing, the amount of the down payment, and the value of a trade-in can also be negotiated.Rate this question:
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- 10.
Which of the following methods can make you more money when selling your car? (check three)
- A.
Sell the vehicle yourself on www.AutoTrader.com
- B.
Trade in your car at the dealership
- C.
Advertise in your local paper
- D.
Use an online auction
- E.
Sell the car on your own with a sign in the window
Correct Answer(s)
A. Sell the vehicle yourself on www.AutoTrader.com
C. Advertise in your local paper
E. Sell the car on your own with a sign in the windowExplanation
The three methods that can potentially make more money when selling a car are selling the vehicle yourself on www.AutoTrader.com, advertising in your local paper, and selling the car on your own with a sign in the window. These methods allow for more visibility and reach to potential buyers, increasing the chances of selling the car at a higher price. Trading in the car at a dealership may not yield as much profit as they usually offer lower prices. Using an online auction can be unpredictable, as the final selling price may not always be favorable.Rate this question:
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- 11.
Women tend to pay more for cars because: (check all that apply)
- A.
Dealers take advantage of them
- B.
Women aren't as comfortable negotiating
- C.
Women generally don't research online for the best prices
- D.
None of the above; dealers give women the best prices.
Correct Answer(s)
A. Dealers take advantage of them
B. Women aren't as comfortable negotiating
C. Women generally don't research online for the best pricesExplanation
Women tend to pay more for cars because dealers take advantage of them, women aren't as comfortable negotiating, and women generally don't research online for the best prices. This suggests that dealers may exploit women's perceived lack of knowledge or confidence in car buying, leading to higher prices. Additionally, women's hesitation or discomfort with negotiating may result in them accepting less favorable deals. Furthermore, the lack of online research may prevent women from finding the best prices available in the market.Rate this question:
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- 12.
The best time to purchase a vehicle is:
- A.
During a storm
- B.
The end of the month
- C.
The end of the quarter
- D.
The end of the model year
- E.
Any of the above. Buy when others aren't shopping or when salespeople are trying to meet quotas.
Correct Answer
E. Any of the above. Buy when others aren't shopping or when salespeople are trying to meet quotas.Explanation
The correct answer is "Any of the above. Buy when others aren't shopping or when salespeople are trying to meet quotas." This answer suggests that the best time to purchase a vehicle can be during a storm, at the end of the month, at the end of the quarter, or at the end of the model year. The reasoning behind this is that during these times, there may be fewer people shopping for vehicles, which could result in better deals and negotiations. Additionally, salespeople may be more motivated to meet their quotas during these times, making it a favorable time to purchase a vehicle.Rate this question:
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