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Car Financing Assignment Questions

The document outlines the financial considerations for purchasing a vehicle, including cash purchases, financing options, and leasing. It prompts the reader to calculate total costs, interest paid, and payment durations for different payment methods. Additionally, it encourages the reader to reflect on their own vehicle purchase plans and the implications of various financing parameters.

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Bahareh Zare
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15 views2 pages

Car Financing Assignment Questions

The document outlines the financial considerations for purchasing a vehicle, including cash purchases, financing options, and leasing. It prompts the reader to calculate total costs, interest paid, and payment durations for different payment methods. Additionally, it encourages the reader to reflect on their own vehicle purchase plans and the implications of various financing parameters.

Uploaded by

Bahareh Zare
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Part A: Paying for a New Vehicle

Cash Purchase
1) If you make a cash purchase, how much will you pay for the vehicle?
(including the delivery cost)
Before tax: With tax:

Financing
2) How many years will it take to pay off this vehicle?

3) If you choose to make monthly payments,


a) How much will you pay in total over the entire term?

b) How much interest will you have paid in total?

4) If you choose to make weekly payments,


a) For how many weeks are you making payments? (note: use 52 weeks in a year, not 4
weeks in a month)

b) How much will you pay in total over the entire term?

c) How much interest will you have paid in total?

Leasing
5) What do you notice about the interest rate when leasing vs financing?

6) If you choose to make monthly payments,


a) How much will you pay in total over the course of the lease?

b) When the lease is finished, you may choose to return it to the dealership, or pay the
buyout cost to keep it. If you choose to pay the buyout cost, how much will you have
paid for the vehicle in total?

Making a choice
7) If your friend is planning to buy a vehicle, what advice would you give them about leasing vs
financing vs paying cash up front?
Part B: Changing Parameters on Financing
Go to [Link]

Use the Auto Loan calculator to complete the table

Purchase Duration Interest Monthly Total Cost Weekly Total Cost


Price of Loan Rate Payment of Loan Payment of Loan
Amount (amount paid Amount (amount paid
for the whole for the whole
term with term with
monthly weekly
payments) payments)

$ 30 000 6 years 8%

$ 30 000 4 years 8%

$ 30 000 6 years 7%

$ 30 000 4 years 7%

What are your observations about how monthly vs weekly payments affects the cost of
the loan?

What are your observations about how the interest rate affects the cost of the loan?

What are your observations about how the duration (length of the term) affects the cost
of the loan?

Part C: Plan your own car purchase


Describe the vehicle that you would like to purchase (make, model, new/used, purchase
price):

Run the numbers…


How much do you pay if you pay cash?
If you finance this car, what payment option(monthly, biweekly, weekly, duration) are
you choosing and why?

What will you need to consider with your savings goals and/or monthly budget to pay for
this car in the way that you chose?

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