Question

question 3 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 means he will have less equity.
b. a down payment has no effect on equity.
c. a higher down payment means he will have more equity.
d. a higher down payment will compound equity faster.

Explanation:

Equity in a vehicle is the portion of the car's value the owner outright owns. A larger down payment directly increases the owner's initial ownership stake, so it increases equity immediately. Compounding does not apply here, as equity from a down payment is a fixed initial amount, not a growing balance with interest.

Answer:

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