Question

question 7 of 10
instead of 10 percent, juan plans to pay 20 percent as a down - payment on a car that costs $12,000. how will this higher down payment affect his equity?
a. a higher down payment will compound equity faster.
b. a higher down payment means he will have less equity.
c. a down payment has no effect on equity.
d. a higher down payment means he will have more equity.

Explanation:

Equity in a purchase is the portion of the asset's value that the buyer owns outright. A down - payment is the initial amount paid towards the purchase. A higher down - payment means a larger portion of the asset's value is owned initially, thus increasing equity.

Answer:

D. A higher down payment means he will have more equity.