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Purchasing a Car Project

Directions: Complete all of the tasks and fill out all the tables below. When
completed with the tables, write the short answers/essay.
It is time for you to purchase your first new car! You have been working hard to save money for
your down payment, and now you have enough money saved!

Your Car

Select the car you would like to purchase. You will be purchasing a new car, so shop
around to get the best price.
a. Suggested (local) websites:
i. http://www.htownhyunda i.com/
ii. http://www.hackettstownhonda.com/index.htm
iii. http://www.subaru46.com/index.htm
b. Feel free to look for your own make/model somewhere else!

Your Financing Requirements

You will be using your savings as a down payment (a sizeable, up-front payment) and
financing the remainder of the cost of the car. Your down payment should equal 10% of
the cost of the car. Subtract the cost of the down payment from the amount to figure out
how much you need to finance (borrow in a loan).
Example If a car costs $15,000 you would put down a 10% downpayment of $1,500
[15,000 x .10] and your loan would be for $13,500 [15,000 1,500]
Your Car
Make
[Ex Toyota]
Model
[Ex
Corolla]
Price
[Ex $15,000]

Honda
2015 Civic

$21,980

Your Financing Requirements


Total Price of Car:

$17,584

Downpayment:

$4,396

Amount you will be


financing:

$21,980

Your Loan and Payments

Now you need to gather information about financing.


You must find information about financing your car loan for 3 different lengths of time.
You may use information from the same place to finance your purchase, or a combination
of places where you can obtain financing.
Use the link below for an online loan calculator.
Monthly Loan Payment Calculator

Complete the table below:

Loan #1
Name of Bank
Amount to be financed
($)

Loan #2

Loan #3

Honda dealership

Honda dealership

Honda dealership

$17,584

$17,584

$17,584

Length of loan - Years

2 years

3 years

24 months

Length of Loan - Months

5 years

36 months

60 months

Interest Rate (%)

6.9

6.9

6.9

Monthly Payment
amount ($)

$786

$542

$347

$18,864

$19,512

$20,820

$1,280

$1,928

$3,236

Total amount paid over


length of the loan
(Monthly payment
amount x the length of
the loan in months)
Total amount of interest
paid over length of car
loan. (Total amount
paid minus the amount
to be financed)

Short Answers
Answer each of these in at least a few complete sentences to get full credit. Unbold your answers.
1. Now that you have completed the table above, which financing option would you
choose? Why would you choose that particular option be specific!
I would choose the 24 month plan because you would be putting less money into
the car in general but you would be paying more monthly but it will only be for 24months
rather than paying 200 hundred less but having to pay that monthly amount for more than
2 times longer.
2. What do you think would happen if you increased your down payment to 20% of
the cost of the car? Would this cause you to wait longer and save more before
making your purchase? Why or why not?
Yes I would wait to have that money instead of financing that amount and having to
pay more money in general So the cheaper option to save up the extra money for down
payment then finance that amount that is left over.

3. Why did you select THIS car (make and model)? Is this purchase a want or a
need? Explain.
This purchase for me is want because the cost is a little over $20,000 and it
would be very possible to buy a car for under 5 grand. I choose this make and
model because the cars are rely able and affordable.
4. Pretend that you have 3 months of emergency funds saved in the bank, a
monthly after-tax salary of $3,000 a month and average monthly costs of
$2,500. Would getting this new car be possible for you? Would it be a good
idea? Why or why not?
For me it would be because the available monthly amount would be enough
to pay my car payment monthly and still have room to purchase more wants.
5. A rich close friend offers to buy the car for you and says you can pay him/her
back at 2% interest instead of the higher interest rate you found. This would be
a sizeable financial benefit (perhaps hundreds of dollars). Why you should
decline the offer? Explain.
Having a deal like that with a close friend can either end that friendship and or
make you go into dept. He or she also didnt mention a deadline which in the end
can cost more. No payment plan was arranged. Going through with a bank is more
professional and it is properly logged so no mistakes are made.