Everfi Financial Literacy Answers

Everfi Financial Literacy is an interactive online platform designed to educate individuals, especially students, about essential financial concepts. The program covers a range of topics from basic money management to complex financial decision-making processes.

For More Everfi consumer skills answers, you may also visit:
Everfi Credit and Debt Answers
EverFi Module 4 Answers – EverFi Consumer Skills Test

EVERFI Module 4: Consumer Skills

1. Cash

Definition: Cash is physical money in the form of bills and coins.

Explanation: It’s a universal payment method, often used for direct transactions and can help control spending by limiting expenditures to the amount on hand.

2. eCheck

Definition: An eCheck is an electronic version of a paper check, used to make online payments.

Explanation: While convenient for online transactions, eChecks require sharing bank details, potentially increasing the risk of identity theft.

3. Debit Card

Definition: A debit card is a payment card that deducts money directly from a consumer’s checking account to pay for a purchase.

Explanation: Debit cards are widely accepted and offer immediate payment, but they may lack extensive fraud protection.

4. Credit Card

Definition: A credit card is a plastic card issued by a bank, allowing the holder to purchase goods or services on credit.

Explanation: Offers enhanced security and fraud protection, but requires responsible use to avoid high-interest debt.

5. Electronic Payment

Definition: Electronic payment involves transferring money electronically, typically online or through digital platforms.

Explanation: This method is often secure and convenient for online transactions, but not universally accepted.

6. Online Payment

Definition: Online payment is a digital transaction method for purchasing goods or services over the internet.

Explanation: It involves entering card details online and offers a fast, efficient way to shop digitally.

7. Car

Definition: A car is a wheeled motor vehicle used for transportation, typically running on internal combustion engines or electric motors.

Explanation: Cars offer personal mobility and flexibility but can have significant environmental impacts.

8. Carpooling

Definition: Carpooling is the sharing of car journeys so that more than one person travels in a car.

Explanation: It reduces travel costs and environmental impact but requires coordinating schedules with others.

9. Walking

Definition: Walking is the act of traveling or moving from one place to another on foot.

Explanation: It’s a healthy and environmentally friendly mode of transport, suitable for short distances.

10. Public Transportation

Definition: Public transportation refers to buses, trains, subways, and other forms of transport that charge set fares, run on fixed routes, and are available to the public.

Explanation: It’s environmentally friendly and often cost-effective but requires adherence to a predetermined schedule.

11. Bike/Scooter

Definition: Bikes and scooters are two-wheeled vehicles, powered by pedaling or small motors, used for personal transportation.

Explanation: They are eco-friendly, affordable options for short to medium distances, with the need for weather considerations.

12. Ridesharing

Definition: Ridesharing involves using apps to book rides in privately-owned vehicles for a fee.

Explanation: It offers convenience and potential cost savings over traditional taxi services, with varying pricing models.

13. Leasing a Car

Definition: Car leasing is a long-term rental agreement offering use of a car for a specified period in exchange for regular payments.

Explanation: It provides access to newer vehicles with lower upfront costs but lacks ownership rights and has mileage limits.

14. Buying a Car

Definition: Buying a car involves purchasing a vehicle outright or through financing.

Explanation: It grants full ownership and no mileage restrictions, but incurs maintenance costs and depreciation.

16. Down Payment (Car)

Definition: A down payment for a car is an upfront payment made at the time of purchasing a vehicle.

Explanation: It reduces the loan amount needed, potentially lowering future monthly payments and overall interest.

17. Loan Term

Definition: Loan term refers to the duration over which a loan is scheduled to be repaid.

Explanation: Shorter loan terms mean higher monthly payments but lower total interest, while longer terms spread out payments but increase total interest cost.

18. Gross Income

Definition: Gross income is the total personal income earned before taxes and other deductions.

Explanation: It’s used to assess financial capacity for loans and large purchases, such as cars and homes.

19. Interest Rate

Definition: The interest rate is the percentage charged on a loan or earned on an investment.

Explanation: It determines the cost of borrowing money or the earnings from savings and investments.

20. Maximum Monthly Payment

Definition: Maximum monthly payment is the highest amount a person can afford to pay monthly towards a loan, based on their income and expenses.

Explanation: This figure helps in budgeting and ensures that loan repayments are manageable within one’s financial situation.

21. Total Car Cost

Definition: Total car cost includes the purchase price of the car along with additional expenses like taxes, insurance, maintenance, and loan interest.

Explanation: Understanding the total cost helps in budgeting and ensures affordability over the car’s lifespan.

22. New vs. Used Car

Definition: The choice between a new car and a used car depends on factors like budget, preference for latest models, or value depreciation.

Explanation: New cars offer the latest features and full warranties, while used cars are generally more affordable and depreciate slower.

23. Consumer Sites

Definition: Consumer sites are websites providing information, reviews, and comparisons of products and services, including cars.

Explanation: They are valuable resources for research, but it’s important to ensure the information is current and unbiased.

24. Car Salesperson

Definition: A car salesperson is a professional who sells cars and offers advice on car purchases at a dealership.

Explanation: They provide detailed information about available cars, though their advice may be influenced by sales goals.

25. Friends/Family

Definition: Friends and family are personal acquaintances who can offer advice and experiences regarding various topics, including car purchases.

Explanation: Their insights can be valuable but may not always be unbiased or fully informed.

26. Other Costs (Car Buying)

Definition: Other costs in car buying include expenses beyond the purchase price, like insurance, maintenance, and registration fees.

Explanation: Considering these costs is crucial for a realistic budget and understanding the total cost of ownership.

27. Pre-financing (Car Buying)

Definition: Pre-financing in car buying involves securing a loan or financial agreement before purchasing a car.

Explanation: Shopping around for financing can lead to better rates than those offered at dealerships.

28. Negotiation (Car Buying)

Definition: Negotiation in car buying is the process of discussing terms and prices to reach a favorable purchase agreement.

Explanation: Effective negotiation can result in better deals, especially when comparing offers from different dealerships.

29. Add-ons (Car Buying)

Definition: Add-ons in car buying are additional features or services offered at the time of purchase, like extended warranties or maintenance plans.

Explanation: While they can provide extra benefits, it’s important to assess their value and necessity.

30. Red Flags (Car Buying)

Definition: Red flags in car buying are warning signs that suggest potential issues or dishonest practices at a dealership.

Explanation: Being aware of these can protect a buyer from unfavorable terms, hidden fees, or scams.

31. Leasing a Home

Definition: Leasing a home involves renting a property for a specific period, typically with monthly payments.

Explanation: It offers flexibility and less maintenance responsibility but lacks ownership benefits and long-term stability.

32. Buying a Home

Definition: Buying a home is the process of purchasing residential property, either upfront or through a mortgage.

Explanation: It offers long-term stability and the potential for property value appreciation, but includes responsibilities like maintenance and property taxes.

33. Home Down Payment

Definition: A home down payment is an initial payment made when purchasing a house, representing a portion of the total price.

Explanation: A larger down payment can reduce mortgage size and interest costs, but requires substantial upfront capital.

34. Closing Costs

Definition: Closing costs are various fees and expenses incurred during the home buying process, such as appraisal and legal fees.

Explanation: These costs add to the total expense of purchasing a home and typically range from 2-5% of the purchase price.

35. Inspections

Definition: Inspections are evaluations of a property’s condition, often conducted before finalizing a home purchase.

Explanation: They help identify potential issues or needed repairs, ensuring the safety and value of the property.

36. Mortgage Pre-approval

Definition: Mortgage pre-approval is a lender’s conditional agreement to provide a loan up to a certain amount before a specific property is chosen.

Explanation: It gives buyers an idea of their borrowing capacity and can make them more attractive to sellers.

37. Loan Term (Mortgage)

Definition: The loan term for a mortgage is the length of time over which the loan is to be repaid.

Explanation: Longer terms result in lower monthly payments but higher overall interest, while shorter terms increase monthly payments but decrease total interest.

38. Loan Interest (Mortgage)

Definition: Loan interest for a mortgage is the cost charged by lenders for borrowing their money.

Explanation: It’s a portion of each mortgage payment, with rates influenced by market conditions and credit scores.