Question 2: Personal Finance
Aaliyah's car loan and credit score
- Units 3 and 5
- 3 points
- About 13 minutes
You can use a calculator on this question, just like on exam day.
A short scenario about a person's or household's money, with numbers and goals: you read the data (for example, total assets versus total liabilities), describe a challenge or opportunity, and explain an action that would help them reach a goal. On the exam: Question 2 of 4, Section IIB (Questions 2–4 share 65 minutes); suggested time 12–13 minutes, 5% of the score. Assesses Skill Categories 1 and 3. Section II has 4 free-response questions in 90 minutes (40% of the score). The exam is fully digital in Bluebook, and only a 4-function calculator is allowed (handheld or the built-in Desmos 4-function calculator).
The question and its sources
Respond to parts A, B, and C. Aaliyah has come to you, a financial advisor, for guidance.
Aaliyah's situation
Aaliyah, 21, starts a new job in four months and will need a reliable used car to get there. The car she wants costs $12,000. She has $1,500 saved for a down payment, so she would borrow $10,500 for 48 months.
Her credit report shows a credit score of 645, two late credit card payments in the past year, and a credit card balance of $1,700 on a $2,000 limit.
Her goals: keep her car payment under $300 a month, and improve her credit score.
Table 1 shows the loan offers she has received. A salesperson at QuickWheels told her the dealer's offer is 'good today only' and urged her to sign right away.
Source: Hypothetical person and figures written for this practice question
Table 1. Loan offers for $10,500 over 48 months (example rates)
| Lender and requirement | APR | Monthly payment | Total of payments |
|---|---|---|---|
| Riverview Credit Union, credit score 680 or higher | 7.5% | $253.88 | $12,186.24 |
| Riverview Credit Union, credit score 620–679 | 11.0% | $271.38 | $13,026.24 |
| QuickWheels dealer financing, no credit check | 24.0% | $342.32 | $16,431.36 |
Source: Hypothetical data written for this practice question
Suggested time: 13 minutes
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Part (A)
1 pointUsing data from the scenario, calculate the total interest Aaliyah would pay over the life of the loan she currently qualifies for at Riverview Credit Union. Show your work.
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Part (B)
1 pointDescribe one financial challenge or opportunity in the scenario that is affecting Aaliyah's ability to achieve her financial goals right now.
0 / 2,500 characters
Part (C)
1 pointExplain how one specific step Aaliyah could take would help her achieve one of her financial goals.
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