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.htownhyundai.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 Car
Make
[Example Toyota]
Model
[Example Corolla]
Price
[Example - $15,000]

Bmw
428i coupe
$50,230

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% down-payment of $1,500
[15,000 x .10] and your loan would be for $13,500 [15,000 1,500]
Your Financing Requirements
Total Price of Car
Down-Payment
[Price X .10]
Amount you will be
financing
[Price Down-payment]

$50,230
$5,023
$45,207

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:

Name of Bank
Amount to be financed
($)

Loan #1
Bank of America

PNC

Chase

$45,207

$45,207

$45,207

Length of loan - Years

Loan #2

2 years

Loan #3

3 years

5 years

24

36

60

Interest Rate (%)

2.49%

2.39%

2.24%

Monthly Payment
amount ($)

$1,933

$1,158

$797.13

$46,392

$41,688

$47,827

$1,185

$3,159

$2,620

Length of Loan - Months

Total amount paid over

length of the loan
[Monthly payment X the
length of the loan in
months]
Total amount of interest
paid over length of car
loan. [Total paid the
amount financed]

Short Answers Answer each of these in at least a few complete sentences to get full credit.
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 5 year
chase loan because my monthly payment would be lower and I would have more
time to pay it off even though I will have to pay $2,620 in interest.
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? If I put down a bigger down payment my monthly payment would be
much lower and I would pay less interest. I would not wait longer because it would
take long to save 20% of the car and financing seems like a better option for me.
3. Why did you select THIS car (make and model)? Is this purchase a want or a need? Explain.
I selected this car by a want. I like the way it looks and how its fast. I could get a
cheaper car for my practical needs
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?

This would not be possible for me because I would only have 500 dollars a
month for a car payment and I want a luxury car. I dont think this is a smart
idea because if you have an emergency you will have no money left.