Deciding which car and car loan you can afford
In this simulation activity, students calculate monthly installment loan payments and total costs for three different cars to apply a common strategy for purchasing big-ticket items.
Installment loans help people purchase big-ticket items by allowing them to make payments over an extended period of time.
How do installment loans help consumers purchase big-ticket items?
How does an interest rate affect my monthly payment?
Understand how the purchase price, the annual percentage rate of the loan (APR), and the length of the loan affect monthly payment amounts
Calculate and compare the monthly costs and total amount paid of three cars that would be purchased using an installment loan
What students will do
Calculate the monthly payments on an installment loan using varying principals, interest rates, and lengths of time.
Compare car purchase possibilities and make a reasonable decision given the information provided.
Reflect on ways to establish responsible loan practices.