Buying your Car Project

INTRODUCTION

You are going to buy a car that will need to be financed. You will need
to look at different options and decide which will be the best choice for
your situation. Your relative has given you $5,000.00 for a down
payment to buy a car. You cannot finance more than $45,000.00 to try
to make this project reality.

You will need to find an advertisement for a car that you would like to purchase. You will hand
in a report that details your findings.

TASK

In this lesson you will work to use economic concepts and mathematical calculations in deciding,
hypothetically, what car to buy and how to finance the purchase, and experience this real-life
application.

PROCESS

1. Find an advertisement for a car that you would like to purchase. Remember to look at different
options and discuss with other students or teacher which car will best suit your needs in your
present situation. For the cars you consider, use "Edmunds Car Buying Guide "or "Kelly Blue
Book " to learn how the advertised prices compare with market prices generally for cars of the
same make, year, and model.

2. Once you have found the automobile of your choice and have determined the amount you will
be spending on the car, you need to calculate the monthly payment. The "Loan Calculator " at
http://www.bankrate.com/calculators/savings/simple-loan-payment-calculator.aspx , may be
helpful in calculating the monthly payments according to the amount of borrowed principal.

Calculate the monthly payment for your car for each option below using the monthly payment
calculator. Then you need to fill out 3 months amortization schedule for each loan (9 total
months). Make sure you show all your work (like we did in class) and type your Amortization
Schedule in an Excel Spreadsheet. You will also need to calculate the final amount you would
have to pay for each of the three loans and show you work for that.

Loan Interest Rate Length in Years

I 4.5% 5
II 4% 4
III 3.5% 3
 Buying your Car Project
3. Provide a word processed summary of your project. Tell what you think your best loan option
would be, and justify that conclusion. Include mathematical reasoning behind this conclusion
from your findings. Also, discuss what situations might make you decide not to take each of the
following:

 The lowest interest rate

 The smallest monthly payment
 The shortest time
 The loan with the lowest cost

As part of your written summary, include what you have learned from this project.

4. Final Report! The following information must be included in your final report:

 Evaluation sheet
 An ad for the car of your choice
 Monthly payments for each option calculated by using the monthly payment formula in
an Excel Spreadsheet and all work shown (neatly handwritten).
 Total cost of the loan for each option (monthly payment multiplied by number of
payments-neatly handwritten).
 A word processed summary of which is the best loan option for your situation along with
a justification of why. A summary of what you learned from this project should be
included in the written summary (needs to be 200 words or more)

CONCLUSION

After completing this lesson, you will have an understanding of the

process and cost of buying an automobile via financing.
 Buying your Car Project
ASSESSMENT ACTIVITY

Self Evaluation Rubric: A rubric that will be used to evaluate your project.

Name:______________________ Date:______________

Self Evaluation Rubric

Before turning in your project make sure that you have completed and attached everything that is
required in the project. This is a similar rubric that will be used to grade your project.

_____ Car ad included (5 pts)

_____ 3 different monthly payments and the total of 9 months Excel Spreadsheet Amortization Schedule
computed correctly (30 pts)

_____ Total cost of loan correctly computed for each case (10 pts)

Word Processed Summary

_____ Best loan option picked and decision justified (30 pts)

Situations Discussed

_____ Lowest interest rate? (5 pts)

_____ Smallest monthly payment amount? (5 pts)

_____ Shortest time? (5 pts)

_____ Lowest cost? (5 pts)

Overall Presentation

_____ Spelling, grammar & neatness (5 pts)

Total points 100 points

Total points earned __________