iCEV Personal Finance Practice Test 2025 – Comprehensive Exam Prep

Question: 1 / 400

What is the common purpose of both auto loans and personal loans?

To finance short-term needs

To buy vehicles

To repay in installments with interest

Auto loans and personal loans serve the common function of allowing borrowers to repay the borrowed amount in installments over a specified period, including interest. This installment repayment structure is fundamental to both types of loans, as it provides a manageable way for individuals to repay their debt over time rather than requiring a single lump-sum payment.

In the case of auto loans, the funds are allocated specifically for purchasing a vehicle, while personal loans may be used for a variety of expenses, including but not limited to vehicle purchases. Despite the differing purposes of the loans, the shared characteristic of installment repayment with interest remains constant, making this option applicable to both loan types.

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To consolidate debt

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