Financial Counseling Certification Program (FiCEP) Practice Exam

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What is one advantage of leasing a car?

No upfront cost
Flexible payment options
Locked into a contract
Ownership at the end of term

The correct answer is: Locked into a contract

Leasing a car typically offers a variety of advantages, and one significant benefit is that it often requires no upfront cost, which helps individuals who may not have the financial means to make a large down payment for purchasing a vehicle outright. In many cases, lessees may only need to cover the first month's payment, taxes, and fees at the time of signing the lease, which makes it more accessible for many consumers. The flexible payment options associated with leasing can also be appealing. Lease payments are usually lower than loan payments for car purchases, allowing individuals to drive a newer model at a reduced monthly cost. Furthermore, because leasing allows individuals access to the latest vehicle technology and features every few years, many find leasing a favorable option as their needs change. It's important to recognize that leasing does not provide ownership at the end of the term, which means that once the lease concludes, the lessee returns the car and has no equity built up. Instead, they have the option to lease a new vehicle. This dynamic can be advantageous for those who prefer to drive newer models with the latest advancements without the long-term commitment involved in car ownership.