All questions into the Futuredealerships' doors, explains analyst Tom Libby,The 0% offers get the buyers in thebut most don't get the great deals. Here's why:banners that promised big saviMy old granny used to chsaving," she would cackle. "Youdeveloping definitionsare mmoney by getting us to spend more,Everybody, it seems, is trying0% financing on cars, frequent-shoppgrocery stores, or those behemoth warestores. Most of the time, what seems likedeal really isn't.BetThaINTERNET ARTICLE by0% FINANCINGWhat's better than free money? Nothing, if youask the millions of Americans who stampeded totheir local car dealerships when auto makersstarted advertising 0% loans.one in four car buyers who financed theirYet at the peak of the 0% frenzy, only aboutpurchases actually got a no-interest loan, accordingto J.D. Power and Associates' Power InformationNetwork, which tracks car-buying trends.interGOALS AT A GLANCESABquickpaymethe car uVOCABULARY Developing Definitions1. Write down what you think each word or phrase means as it is used in the selection. The paragraphthe word appears in is listed in parentheses.a. 0% financing (2) they give you the money with 0% interest rate.b. behemoth (2)c. credit (6)d. maxed out (6)e. balk (7)2. Return to where each word or phrase is used in the selection and check that your definition fits.Revise your definition, if necessary.CRITICAL THINKING Interpreting NumbersUse the graphs and text of "Beware Great Deals That Aren't" to answer the following questions:1. Why is 0% financing not such a good deal?2. a. What are the advantages of choosing a three-year loan of $20 000 at 5.62% interest?b. What are the disadvantages?c. What are the advantages of choosing a five-year loan of $20 000 at 5.62% interest?d. What are the disadvantages?3. If you buy a car in the future, which option will you choose: 0% financing or a traditional car loan?Explain. Beware GREAT DEALSThat Aren'tINTERNET ARTICLE by Liz Pulliam Weston From MSN MoneyMy old granny used to chuckle at storebanners that promised big savings. "You're notsaving," she would cackle. "You're spending."Everybody, it seems, is trying to save usmoney by getting us to spend more, whether it's0% financing on cars, frequent-shopper cards atgrocery stores, or those behemoth warehousestores. Most of the time, what seems like a greatdeal really isn't.0% FINANCINGWhat's better than free money? Nothing, if youask the millions of Americans who stampeded totheir local car dealerships when auto makersstarted advertising 0% loans.Yet at the peak of the 0% frenzy, only aboutone in four car buyers who financed theirpurchases actually got a no-interest loan, accordingto J.D. Power and Associates' Power InformationNetwork, which tracks car-buying trends.The 0% offers get the buyers in thedealerships' doors, explains analyst Tom Libby,but most don't get the great deals. Here's why:Not all buyers qualify. You need good toexcellent credit to qualify for most 0% deals.About half of Americans have good credit.The other half don't. If you've been late a fewtimes on your bills, maxed out your credit cards,or run into other trouble with debt, you mighthave trouble snagging the advertised rate.Even if you qualify, you still might not be ableto afford the loan. That's because many low- orno-interest deals have loan terms of just two orthree years, which boost the monthly payments.The payments for a $20 000, five-year loan at5.62% would be $383.13 a month. At 0% forthree years, the monthly payment is $555.55.If the loan is just two years, the payments spike to$833.33. If you can make those payments, great.The best way to pay off most car loans isquickly. But chances are you'll balk at the higherpayment and settle for a longer loan, which meansthe car ultimately will cost you more.

An article has been presented on financing modes and options. Several questions follow based on that…

Beware GREAT DEALS That Aren't INTERNET ARTICLE by Liz Pulliam Weston From MSN Money My old granny used to chuckle at store banners that promised big savings. "You're not saving," she would cackle. "You're spending." Everybody, it seems, is trying to save us money by getting us to spend more, whether it's 0% financing on cars, frequent-shopper cards at grocery stores, or those behemoth warehouse stores. Most of the time, what seems like a great deal really isn't. 0% FINANCING What's better than free money? Nothing, if you ask the millions of Americans who stampeded to their local car dealerships when auto makers started advertising 0% loans. Yet at the peak of the 0% frenzy, only about one in four car buyers who financed their purchases actually got a no-interest loan, according to J.D. Power and Associates' Power Information Network, which tracks car-buying trends. The 0% offers get the buyers in the dealerships' doors, explains analyst Tom Libby, but most don't get the great deals. Here's why: Not all buyers qualify. You need good to excellent credit to qualify for most 0% deals. About half of Americans have good credit. The other half don't. If you've been late a few times on your bills, maxed out your credit cards, or run into other trouble with debt, you might have trouble snagging the advertised rate. Even if you qualify, you still might not be able to afford the loan. That's because many low-or no-interest deals have loan terms of just two or three years, which boost the monthly payments. The payments for a $20 000, five-year loan at 5.62% would be $383.13 a month. At 0% for three years, the monthly payment is $555.55. If the loan is just two years, the payments spike to $833.33. If you can make those payments, great. The best way to pay off most car loans is quickly. But chances are you'll balk at the higher payment and settle for a longer loan, which means the car ultimately will cost you more.

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS