Name_____________________________________________Period_______Score___________
Overview
Few of us live, work, and shop within a small geographic area. Most of us need transportation to go to work or school or for other reasons. Transportation, and more specifically the automobile, has become a necessity for most of the people in our society. Your selection and use of an automobile is a fundamental part of your personal financial plan. Whether you buy a new car or a used car, there are proven strategies that will make the experience better and minimize your costs. In this unit, you will investigate the steps in buying a car and in financing the purchase. You will determine the costs associated with owning and operating a vehicle including maintenance, insurance and fees.
Cars and Insurance - Getting a Set of Wheels
In this unit, you will . . .
describe the process of buying a new or used car, including selection, financing, and wise buying practices
explain automobile leasing costs, processes, advantages, and disadvantages
list the costs of owning and operating a car
explain the different types of automobile insurance and strategies for reducing costs
Vocabulary
APR
ASE Certified Mechanic
Bait and Switch
Base Price
Beneficiary
Blue Cross/Blue Shield
Car Make
Car Model
Cash Value
Certified Used Car
Collision Insurance
Comprehensive Insurance
Copay
Cost of the loan
Dealer Cost
Dealer List Price
Deductible
Depreciation
Disability Insurance
Down Payment
Extended Warranty
Factory Warranty
Factory-to-Dealer Holdbacks
Factory-to-Dealer Incentives
Gap Insurance
HMO Insurance
Invoice Price
Leasing
Lemon
Liability Insurance
Medical Payments Insurance
Medicare
Miles per Gallon (MPG)
Monroney Sticker Price (MSRP)
POS Insurance
PPO Insurance
Premium
Residual Value
Social Security Insurance
Term Life Insurance
Uninsured Motorist Coverage
Upside-down
Vehicle Identification Number (VIN)
Whole Life Insurance
Worker's Compensation Insurance
 test
Directions'>Section1
Directions: Identify your personal transportation wants and needs by answering the following questions:
How will you use your car? Choose all that apply.
Drive to school
Drive to work
Carry friends
Carry family members
Hauling
Sports and Recreation
Highway
City
Suburban
Rural
Off-road
Mountain roads & Snow conditions
Where will you park your car most of the time? Your parking space will determine the amount of money you will want to spend if the car isn’t protected from the weather or theft.
Driveway
Street
Parking lot
Garage
What extra features would you like in a car?
Sun roof/Moon roof
Manual transmission
Navigation System
Automatic transmission
Deluxe Safety Features
Four-wheel drive
Deluxe Audio System
Leather Seats
Video System
Third-Row Seat
Roof Rack
Heated Seats
Cruise Control
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How will you carry insurance? Identifying your insurance requirements will help you gain an accurate quote from an insurance company.
Your parents’ policy
Your own policy
Do you qualify for any insurance discounts? Knowing what discounts you qualify for will help you to get an accurate quote from an insurance company.
Good student
Non-drinking and nonsmoking
Driver’s education
No past accidents or tickets
Do you plan to purchase a new or a pre-owned car?
New car (average cost is $25,000)
Pre-Owned car (average cost is $15,000)
What is the maximum age of the car you will accept? ____________________
What is the maximum number of miles you will accept? ____________________
How will you pay for your vehicle? You need to know how you will pay for your car to prepare for financing a loan, if required.
How much money can you contribute? ___________________
How much money will your parents contribute? ___________________
What is the maximum loan you can afford? ___________________
Total Available for car purchase ___________________
Section 2
Directions: Identify three types of vehicles that meet your criteria and complete the questions below. Research to compare pricing and features for your three choices. Possible online resources include:
www.carfax.com
www.nadaguides.com
www.edmunds.com
www.consumerreports.com
www.fueleconomy.gov
www.safercar.gov
Vehicle 1: Year:____________ Make:_____________________ Model:____________________
Price:________________ Highway MPG:_________ City MPG:_________ Miles:_____________
Annual Fuel Cost:______________ Monthly Fuel Cost:______________ Safety Rating:__________
Features:
Sun roof/Moon roof
Manual transmission
Navigation System
Automatic transmission
Deluxe Safety Features
Four-wheel drive
Deluxe Audio System
Leather Seats
Video System
Third-Row Seat
Roof Rack
Heated Seats
Cruise Control
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Vehicle 2: Year:____________ Make:_____________________ Model:____________________
Price:________________ Highway MPG:_________ City MPG:_________ Miles:_____________
Annual Fuel Cost:______________ Monthly Fuel Cost:______________ Safety Rating:__________
Features:
Sun roof/Moon roof
Manual transmission
Navigation System
Automatic transmission
Deluxe Safety Features
Four-wheel drive
Deluxe Audio System
Leather Seats
Video System
Third-Row Seat
Roof Rack
Heated Seats
Cruise Control
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Vehicle 3: Year:____________ Make:_____________________ Model:____________________
Price:________________ Highway MPG:_________ City MPG:_________ Miles:_____________
Annual Fuel Cost:______________ Monthly Fuel Cost:______________ Safety Rating:__________
Features:
Sun roof/Moon roof
Manual transmission
Navigation System
Automatic transmission
Deluxe Safety Features
Four-wheel drive
Deluxe Audio System
Leather Seats
Video System
Third-Row Seat
Roof Rack
Heated Seats
Cruise Control
______________________
______________________
Which vehicle would you choose and why?
Down Payment: The amount of your own money you pay upfront for the vehicle. It is recommended that you make a 10% to 20% down payment. The larger the down payment you are able to make, the less principle you will need to borrow.
SECTION 1
Directions: Use the examples given to compute the down payment required to purchase the following vehicles:
Vehicle Price 10 % Down Payment 20% Down Payment
Truck $13,000
Sedan $23,000
Coupe $18,500
SECTION 2
Directions: Access the website Edmunds.com and locate the Payment Calculator on the main page under “New Cars” tab, Calculators, find the “More Calculators” link on the left. Use the Payment Calculator to complete the calculations outlined below. You will need to enter the down payment, purchase price, interest rate, and loan term. Pay particular attention to the effect of changes in the interest rate, down payment, and length of loan. http://www.edmunds.com/calculators/car-loan.html
Directions: Use a Payment Calculator to complete the calculations outlined below. Pay particular attention to the effect of changes in the interest rate, down payment, and length of loan.
1. Cost of Vehicle (Purchase Price) $9,000 Loan Term 36 months
Interest Rate 9% Down Payment 10%
Monthly Payment:___________ Total Loan Amount:____________
Cost of the Loan (Total Interest):____________
2. Cost of Vehicle (Purchase Price) $9,000 Loan Term 36 months
Interest Rate 6% Down Payment 10%
Monthly Payment:___________ Total Loan Amount:____________
Cost of the Loan (Total Interest):____________
3. Cost of Vehicle (Purchase Price) $9,000 Loan Term 48 months
Interest Rate 9% Down Payment 10%
Monthly Payment:___________ Total Loan Amount:____________
Cost of the Loan (Total Interest):____________
4. Cost of Vehicle (Purchase Price) $9,000 Loan Term 36 months
Interest Rate 9% Down Payment 20%
Monthly Payment:___________ Total Loan Amount:____________
Cost of the Loan (Total Interest):____________
5. Cost of Vehicle (Purchase Price) $15,000 Loan Term 48 months
Interest Rate 9% Down Payment 10%
Monthly Payment:___________ Total Loan Amount:____________
Cost of the Loan (Total Interest):____________
6. Cost of Vehicle (Purchase Price) $20,000 Loan Term 60 months
Interest Rate 6% Down Payment 10%
Monthly Payment:___________ Total Loan Amount:____________
Cost of the Loan (Total Interest):____________
7. Cost of Vehicle (Purchase Price) $5,000 Loan Term 48 months
Interest Rate 6% Down Payment 20%
Monthly Payment:___________ Total Loan Amount:____________
Cost of the Loan (Total Interest):____________
Section 3
Directions: Evaluate the preceding loan options and identify three things you noticed about the effects that the interest rate, length of the loan, and amount of the down payment have on the cost of the loan or the monthly payments.
Section 4
Directions: Complete the loan information for the car or your choice. Then select a loan term.
Car Manufacturer, Make and Model:
Purchase Price:__________________________ Down Payment:
Starting Loan Amount:____________________ Current Interest Rate: %
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36 months
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48 months
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60 months
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Monthly Payment
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Total Amount Paid
(months x payment)
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Cost of Loan
(Total Interest)
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Which loan term did you select? ☐36months ☐48 months ☐60 months
Section1
Directions: Go to http://www.federalreserve.gov/pubs/leasing/. Use the information on the site to complete the chart. You may summarize the information in your own words if you wish.
Item
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Leasing
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Buying
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Ownership
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Up-Front Costs
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Monthly Payments
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Early Termination
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Vehicle Return
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Future Value
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Mileage
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Excessive Wear
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End of Term
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Section 2
Directions: Go to http://www.federalreserve.gov/pubs/leasing/. Use the information on the site to answer the questions.
1. What items will you need to pay for at the beginning of the lease?
What items will you pay during the lease?
What items might you pay at the end of the lease?
What lease items can sometimes be negotiated?
What are your rights as a lessee?
What are your responsibilities as a lessee?
Directions: Go to http://www.metlife.com. From the menu bar across the top of the screen, select Life Advice. From the list in the middle of the screen, select Insurance. From the list in the middle of the screen, select Auto Insurance. Use the information on the site to answer the questions.
Name at least seven (7) things you should do if you are in an accident?
What is liability insurance?
Explain the two different types of liability insurance?
Explain what the number 50,000/100,000/30,000 represents.
What is the difference between Comprehensive and Collision coverage?
What is a deductible?
What is uninsured/underinsured motorist protection, and why do some states require it?
What kinds of bills or costs will Medical Payments/PIP coverage provide?
What are the seven (7) factors that determine or affect your auto insurance premium?
Name four (4) ways teens can save money on car insurance?
What are the six (6) basic elements available in a typical automobile insurance policy?
Directions: Go to http://www.dmv.org. Select Pennsylvania as the state. Search the site for “required auto insurance.” Use the information on the site to answer the questions.
What is the minimum amount of insurance required to legally drive a car in Pennsylvania?
What are the consequences to driving without the proper amount of Pennsylvania car insurance?
Directions: Complete the chart by filling in the appropriate term on each line. Note: terms in the Word Bank may be used only once.
Word Bank
Blue Cross/Blue Shield
Disability Insurance
Health insurance
HMO
Life Insurance
Medicare/Medicaid
POS
PPO
Private pay
Social Security
Term
Whole life
Worker’s Compensation
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