Road Rules:
Researching and Buying a Car
LE SSO N 3 : T E ACH ER ’ S G U I DE
Buying a car is one of the first major financial decisions that many teens and young adults
face. While several considerations factor into this purchase, one of the most important is
the buyer’s monthly payment, which is based on the car’s purchase price and terms of the
loan. In this lesson, students will shop for a car virtually, evaluating various loan options
and learning what it means to be “creditworthy.”
LEARNING OBJECTIVES:
Topic: Buying a Car Students will…
Time Required: 45 minutes • Understand the concept of creditworthiness
SUPPLIES: • Research consumer borrowing
• Computers or tablets
• Compare various types of car loans and lenders
• Internet access
• Notebooks STANDARDS:
• Student activity sheet
Jump$tart Standards:
PREPARATION: • Credit Standard 1
• Copy student activity sheet • Financial Responsibility Standard 2
STUDENT ACTIVITY SHEET: National Standards for Economics:
• Standard 7: Markets and Prices
Deal or No Deal: Understanding
Car Loans • Standard 9: Competition and Market Structure
This activity will teach students • Standard 10: Institutions
how the loan principal, interest rate
an term all factor into a monthly car Common Core ELA Anchor Standards:
payment. Students will calculate • Writing: Research to Build and Present Knowledge
car payments using five different
• Speaking and Listening: Presentation of Knowledge and Ideas
lending scenarios.
• Language: Vocabulary Acquisition and Use
Common Core Math Standards:
• Number and Quantity: Quantities
• Modeling
TEACHER’S GUIDE: ROAD RULES | 1
LE SSO N 3 : TE ACH ER ’ S G U I DE INSTRUCTION STEPS
Essential Question “How can I turn my dream of owning a car into reality?”
Investigate: Dream Car
[Time Required: 5 minutes]
1. Begin by asking students about their dream cars. What would they drive
if money were no object? Why? What factors go into purchasing a car
besides price?
2. Next, tell students to imagine they have saved $5,000 toward the purchase
of a car, an amount that can serve as a down payment. What steps do they
think they should take next toward making their purchase?
Student Preparation
[Time Required: 15 minutes]
3. Distribute the Student Activity Sheet Deal or No Deal: Understanding
Car Loans, which outlines some of the next steps in the process. Then
invite them to visit sites such as [Link] and [Link] to find
the purchase prices of potential cars. Discuss the factors that go into this
decision: if they select a vehicle that costs much more than $5,000, they
will be in debt for longer (due to a loan). Other factors include gas mileage,
new vs. used, depreciation, and matching a car to one’s lifestyle.
Challenge: Understanding Car Loans
[Time Required: 15 minutes]
4. Ask students how a car that costs more than their $5,000 could be
financed. Explain that buyers often take out loans from a bank to cover the
remaining cost. Discuss how these loans will need to be repaid on a monthly
basis, with interest.
5. Have students calculate what their monthly payment would be for each of
the loans on the student activity sheet. How long would it take to repay the
loan in order to own the car in full?
6. Invite students to share which loan they would choose and to explain their
reasoning. Is it always better to choose the loan with the lowest interest
rate? Why or why not?
TEACHER’S GUIDE: ROAD RULES | 2
LE SSO N 3 : TE ACH ER ’ S G U I DE INSTRUCTION STEPS
7. Ask students whether they think they will automatically get the loan they
want. Why or why not? Explain that banks choose to whom they will extend TEACHER’S TIP
loans. What factors do students consider when lending something to a
friend or family member? Responses may include trust, reliability, history What is Reflection?
of returning borrowed items in good shape and money to pay for something The Reflection part of the class gives
borrowed if it breaks. students the opportunity to reflect
on the bigger-picture meaning of
8. Explain that this concept is known as “creditworthiness” and is an the exercise, and to assimilate and
analysis made by a lender when deciding whether or not to lend money to personalize some of the concepts
a consumer. Talk about steps students can take to protect their credit now, and ideas learned about in the class.
including paying any bills on time.
Reflection
[Time Required: 10 minutes]
Invite students to reflect in their journals about the three most important
factors to consider when buying a car. Why are these factors important? How
has their thinking changed since the beginning of the lesson? Is their dream car
the same or would they choose a different vehicle? Why?
TEACHER’S GUIDE: ROAD RULES | 3