Auto Upkeep (2nd Edition)
Chapter 2 Test
Buying an Automobile
Name __________________
Date ____/____/____
Test Score ____
Section 1: Selected Response
Directions: Place the letter that corresponds to the correct answer on the space provided.
___ 1. A realistic interest rate on an automobile loan is _____%.
a. 8
b. 24
c. 48
d. 64
___ 2. Which of the following is not a common place to purchase an automobile?
a. car dealerships
b. world wide web
c. farmer’s market
d. private parties
___ 3. The MSRP is commonly called the _________.
a. dealer cost
b. dealer invoice
c. factory holdback
d. sticker price
___ 4. If you do not have any credit or are under 18, you may need to have someone ________ the
loan with you.
a. pay on
b. cosign
c. read
d. negotiate
___ 5. If you earn $9 an hour and work 30 hours, what would be your gross income in one week?
a. $230
b. $270
c. $300
d. $330
___ 6. If you do not know about a particular business you can check with the _________________.
a. mayor
b. Insurance Institute for Highway Safety
c. Better Business Bureau
d. consumer reporting companies for credit
___ 7. Dealer Cost =
a. Dealer Invoice – Factory Holdback – Factory to Dealer Incentives
b. Dealer Invoice +Factory Holdback + Factory to Dealer Incentives
c. Dealer Invoice x Factory Holdback x Factory to Dealer Incentives
d. (Dealer Invoice/Factory Holdback) – Factory to Dealer Incentives
Section 2: Selected Response ASE Style Questions
Directions: Place the letter that corresponds to the correct answer on the space provided.
___ 9. Technician A says when buying an automobile you should put down at least 20% of the total
cost. Technician B says you should figure out all of the expenses of owning an automobile
before purchasing one. Who is correct?
a. Technician A
b. Technician B
c. Both Technician A and Technician B
d. Neither Technician A nor Technician B
___ 10. Technician A says it will save you money if you get a high interest rate from a bank on the
loan. Technician B says it is always better to lease a car than to own one. Who is correct?
a. Technician A
b. Technician B
c. Both Technician A and Technician B
d. Neither Technician A nor Technician B
___ 11. Technician A says add-ons such as extended warranties and fabric protection are high dollar
profit items for dealerships. Technician B says that it is always better to have a dealership
install accessories (e.g., bug deflectors, mud flaps). Who is correct?
a. Technician A
b. Technician B
c. Both Technician A and Technician B
d. Neither Technician A nor Technician B
___ 12. Technician A says all cars are safe and should not be a concern for a new car buyer.
Technician B says you should take your time to complete research on the safety features on
the vehicle before purchasing one. Who is correct?
a. Technician A
b. Technician B
c. Both Technician A and Technician B
d. Neither Technician A nor Technician B
13. Determine which loan is your best option for purchasing a vehicle. The principle amount for the
loan will be $23,000.
Option 1: 48 months - 6.5% interest rate
Option 2: 60 moths – 5.5% interest rate
Section 3: Constructed Response
Directions: Use complete sentences to answer the following questions. The criteria below will be
used to assess your answers.
14. Is there a three day exchange or cancellation policy mandated by law when buying a new
automobile? Explain your answer.
15. What is a lemon law?
16. Identify if the following will increase or decrease your credit:
_____ Paying a bill late
_____ Carrying a high balance on a credit card
_____ Maintaining a checking and saving account
_____ Paying rent each month
_____ Declaring bankruptcy
_____ Having a large amount of loans