Process

You will use the following documents to show and support you working knowledge in this activity

You need to DOWNLOAD & SAVE on your own device. DO NOT request access.

Car Buying Excel Spreadsheet
(download/save your own copy)

Part 1: Find our your Credit Score

Your teacher will provide you with this. You will use this rating to determine what interest rates your qualify for. There are many factors that go into a credit score. If you are interesting in learning more, you can go here and get an overview.

Part 2: Determine Your Current Finances

Use the worksheet your download at the top of this page to calculate your savings, account balance and monthly income. If you need to use a calculator, use the one from Desmos. Be sure to record all your calculations on the actual worksheet.

(**You can assume all other expenses are being covered and you are working to make car payments only**)

Now you know how much you can put into a down payment on the car and what your maximum monthly expenses for the car can be. Just remember you may want to keep some savings in the bank in case the car need repairs or new tires. That choice is up to you. On the Loan Needs section of your worksheet, fill in the blanks to determine the amount you will need to borrow/finance.

Part 3: Find a Vehicle

As mentioned in the Task, you must select a new or used vehicle that meets the following conditions:

- Under 125,000 miles odometer reading

- Purchased from current Ed Voyles Automotive stock (http://www.edvoyles.com/)

- Must be able to seat 4 adults

- Model year 2016 or newer

- Must be a car you could actually want!

- Make sure your vehicle is affordable given your income. If your can't afford it, you will need to complete this
activity again with a different vehicle!

Once you have found a vehicle, input the required information into the worksheet. Also include the vehicle URL in the worksheet.

Part 4: Financing Options

Step 1:

For an introduction into financing a car - and the mathematics behind it - read the article from U.S. News: How to Finance a Car and Get a Car Loan. You may have noticed a car payment calculator tool was available on this website (and many others!). In this WebQuest, you will be using your own mathematical skills and know-how to make your own to compare rates and terms!

Car loans represent a certain type of mathematical function - exponential functions. For a brief review on exponential functions please go visit:

Khan Academy - Intro to Exponential Functions

Purple Math - Exponential Functions Intro

Now that you have a basic understanding of how car loans work, and the mathematics behind them, it's time to do some loan shopping!

Step 2:

Now we will investigate what the current loan climate looks like. None of the info you are about to explore will be used for the project, but we want you to see what today's rates look like! As you explore - DO NOT ACTUALLY APPLY FOR A LOAN OR GIVE PERSONAL INFORMATION DURING THIS ASSIGNMENT!

Explore current rate trends by looking at:

Bankrate.com's list of Auto Loan Rates and the Current Auto Loan Interest Rate.

Notice how on these sites it often includes a * beside an advertised rate? That is because these are their best advertised rates that many people will not qualify for. Compare some of the advertised rates on the first link with the current average rates on the second link. What are some reasons people with better credit scores get better rates?

Step 3:

Now it's time to use the credit rating you got from your teacher and determine your loan interest rates. Below you will see a table of average interest rates for auto loans for used cars depending on your credit score. These are average loan rates compiled from the above sources. You will use these rates for this project.

Now it's time to determine what option is best for you!

Part 5: Calculate Your Payments

To give you a leg up on calculating your loans, please visit and read up on the following pages

https://www.yourmechanic.com/article/how-to-determine-the-finance-charges-on-a-new-car-loan

https://www.thebalance.com/loan-payment-calculations-315564

https://www.thebalance.com/how-amortization-works-315522

On your worksheet, you will see several columns for data and calculations. Under the Interest Rate row, please copy the interest rates you received from the 'bank' for the 36, 48 and 60 month loan options. Knowing that all car loans calculate interest monthly, please fill in the required values on your worksheet for the remaining variables. Next, use your calculator and the provided exponential equation to find the monthly cost of your vehicle. They you can find the total cost (including the down payment). Is the vehicle the same cost for all 3 options? If not, why would it be different?

Now go to your Excel Spreadsheet and 'program' it to do the mathematics you did by hand on the worksheet. Verify your solutions by checking with your handwritten work. In all yellow cells, you will need to use the programming features of Excel. To calculate your monthly payments for the 36 month term, Use the same equation you did by hand just in Excel. For the 48 and 60 month options, use the PMT function (Help Link Here). In the other yellow cells, make them equations using cell inputs.

Part 6: Choosing The Right Option

Now that you have three loan options to compare, which one will you choose? Can you afford all of the options? Before you decide on your loan option, give a 'pro' and 'con' for each option. After, decide which loan you will choose and write 2-4 sentences explaining why you chose that option.

Finally, look at the last question on the worksheet and try to answer the bonus question!

If you are having difficulty reading this WebQuest, please visit https://ttsreader.com/ to have the text read to you