Credit and Loans — Test

Question 24 • Personal Finance

Which of these statements explains the difference between a lease and a loan?

Answer

A loan requires a large down payment at the beginning while a lease does not.

A lease requires a large down payment at the beginning while a loan does not.

At the end of a loan the car belongs to you, but at the end of a lease, the car still belongs to the lease company.

At the end of a loan, the car still belongs to the lease company, but at the end of a lease the car belongs to you.

Explanation

With a loan, you borrow money to buy the car; after you repay the loan, the car belongs to you. With a lease, you pay to use the car for a set period, and it generally remains the leasing company’s property when the lease ends. Therefore, the correct choice is “At the end of a loan the car belongs to you, but at the end of a lease, the car still belongs to the lease company.”

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