Question

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. You 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?
A. The reduced down payment required for the purchase
B. A lack of knowledge and confidence in the mechanical condition of the car
C. The price of the automobile
D. Avoidance of the vehicle's significant decrease in value due to depreciation

Answer 1

B. A lack of knowledge and confidence in the mechanical condition of the car.

Step-by-step explanation:

One need to be expert in analyzing a car condition in order to buy a used car. The used car is mechanically weak and the buyer should have good knowledge for the mechanical condition of the car. This is a disadvantage if a person has lack of knowledge in car mechanic when in a situation to buy a used car.