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Question 7

A common choice with cars is whether to finance (loan) or pay cash. Financing preserves cash today but adds interest costs; cash avoids interest but uses liquidity you might need for emergency or other milestones. A balanced approach is often to keep an emergency buffer after purchase. Another angle: short-term vs long-term planning — if you plan to buy multiple big items soon, spreading cash use might be wiser. This scenario-style question asks you to pick the best trade-off for a plausible situation so you practice weighing liquidity vs cost.

If you have enough cash but expect a big repair soon, which is generally wiser?

Did You Also Know...

By Wise Wallet

Buying mortgage points lowers your rate in exchange for an upfront cost, so you should only buy points if you’ll keep the loan long enough to break even.