Car;+Financing

You are making $5,000 per month in your new job and you are ready to buy your first new car! You don't want to pay for the car all at once, you want to take out a loan and make monthly payments.

--Shop for a new car online. ---Shop for the best loan. ---Take a look at your monthly budget and see what you can afford. ---Choose your car and create a poster with a picture of the car, price, interest rate and monthly payment.

Take the challenge! Why?

Because you will be ahead of the game compared to others in knowing how to manage a budget, deal with a bank, and buying a new car! You'll also practice your web navigation skills. Of course this is just for practice and for fun! You'll have to wait a few years, work hard, get a good-paying job, and then it all will be real. Until then...Good luck!

Here's the fun part! Follow the 5 steps below.


 * 1. Complete Monthly Budget Worksheet ** This way you will know how much you can afford to pay each month. Download the Worksheet.

You will also learn about loans. When you take out a loan to buy a car, it is called an auto-loan. Other kinds of loans are personal loans and home loans. For this activity there are three types of auto loans available: 3-year, 5-year, and 6-year loans. This will be something to think about before you visit the new car website.


 * 2. Shop for your new car- ** visit specific dealerships ( [|www.ford.com] ; [|www.chevrolet.com] ; etc. or visit [|www.kbb.com] ) Choose a car. In most cases, the shopper can negotiate with the sales manager to get a lower price than the price listed on the vehicle (the "sticker price"). This process of negotiation is sometimes called "haggling". Subtract 5% from the listed "sticker price" because you are a good negotiator.

[|Credit Union from last Wednesday].


 * 3. Shop online for a loan. ** Use the **Auto Loan Worksheets to calculate your loan**. Learn about interest rates! Learn how to use a special loan calculator to determine what your monthly payments will be! Learn which type of loan is best for you: a 3-year, a 5-year, or a 6-year loan. It's easier than you might think

You will use the calculator to complete the loan table on your worksheet. You will find a) your monthly payments, b) monthly interest, and c) total interest paid on the loan. Don't forget to answer all questions on the worksheet. **Important Note!** **on your worksheet enter the following interest rates:**


 * a. for a 3-year loan, put in 5% interest. **
 * b. for a 5-year loan, put in 6% interest. **


 * c. for a 6-year loan, put in 7% interest. Complete your table and answer all questions. **

4. **Analyze.** Learn how to make good decisions with money. Take in relevent information and make a "calculated" decision. Think. Review the questions on your monthly budget and your loan worksheets. Should you buy this car? Can you afford it? Would you have to make changes to your monthly budget? If you had to change your spending habits, what would you change? The amount you spend on food, entertainment, or clothes? Should you shop for a less expensive car? Or you have enough money to buy something more fancy?

Another strategy is to find a different dealership website and check the price on the same car. These are just options.

5. **Choose your car and loan.** Create a “poster” of your new car in word, or publisher. (create it as if you were doing an advertisement for your car) Make sure you include the cost of your new car, the monthly payment, interest rate, and the number of years that you will be financing the car.