Personal Finance: Automobile Payments & Maintenance

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Presentation transcript:

Personal Finance: Automobile Payments & Maintenance A cool ride is only cool when it is not being repossessed.

Lesson Objective: Students will know how to calculate the cost of automobile payments and maintenance using a lookup table.

Discussion Do you know the price of your favorite car? What is a loan? What does interest mean? What is a payment?

Discussion Do you know the price of your favorite car? My price is one I can pay cash for. What is a loan? Spending money you haven’t earned yet. You must pay it back with interest. What does interest mean? The extra money you must pay back because you used someone else's money. What is a payment? The amount you must pay monthly; a chain around you shoulders until the loan is paid off.

Car Payments Unless you have enough cash to buy a car outright, you will be taking out a loan for your car. There are calculations that you can use to calculate payments, but typically you will look up your payments on a table. During this lesson, you will learn how to use a lookup table to find values.

Car Payments If you purchase a car, you are not responsible for the entire purchase price of the car as part of your grade. It would be impossible for you to pay off a $ 9,000 car during this class, but you could easily make the payments for that same amount. First, you will find out the monthly payment on a car bought with a loan. *All loans offered through this class are for 5 years at 5% interest.

The following chart can be use to look up these values… Car Payment Chart The following chart can be use to look up these values…

Car Payment Chart A 7-year old Taurus with 85,000 miles would cost me $9,000. But, what are my weekly payments?

Car Payment Chart A 7-year old Taurus with 85,000 miles would cost me $9,000. But, what are my weekly payments?

Car Payment Chart A 7-year old Taurus with 85,000 miles would cost me $9,000. But, what are my weekly payments? So, at $39.19 each week, or $169.84 a month, a 5 year loan costs: 5 x 12 x $169.84 = $10,190.40 With a loan, you bought a $9,000 car for more than $10,000.

Car Payment Chart A 3-year old Mustang with 35,000 miles would cost me $19,000. But, what are my weekly payments?

So my weekly payment is $82.74. Car Payment Chart A 3-year old Mustang with 35,000 miles would cost me $19,000. But, what are my weekly payments? $39.19 + $43.55 = $82.74 So my weekly payment is $82.74.

Car Maintenance Costs The cost of maintaining a car will go up each year. The older the car, the higher the costs. However, a car gets old in two different ways. First is mileage: A car will last between 150,000 and 200,000 miles before it needs major work. Second is age: A car that is more than 20 years old becomes more expensive to repair because parts are hard to get and the car will tend to break down. You will use another chart to estimate maintenance costs.

Car Maintenance Costs What is the Weekly maintenance cost for a 3-year old Mustang with 35,000 miles?

Car Maintenance Costs What is the Weekly maintenance cost for a 3-year old Mustang with 35,000 miles? $7.50

Car Maintenance Costs What is the Weekly maintenance cost for a 7-year old car with 72,000 miles?

Car Maintenance Costs What is the Weekly maintenance cost for a 7-year old car with 72,000 miles? $25.00

Review: What is a loan? What does interest mean? What is a payment?

Review: What is a loan? What does interest mean? What is a payment? Spending money you haven’t earned yet; You must pay it back. The extra money you must pay back because you used someone else's money. The amount you must pay monthly, a chain around you shoulders until the loan is paid off.