Buying a New Car.

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Presentation transcript:

Buying a New Car

Terms to Know Down Payment - Cash paid up-front by a borrower to reduce the amount financed in a lease or loan. A larger down payment can reduce your monthly payments. 12,500 Vehicle Price - 1,500 Down Payment -------------------------------- 11,000 Total Loan Amount

Terms to Know Sales Tax – A percentage of the cost of an item (in this case, the car) that is added to the total cost. Sales tax varies by state. The sales tax in Kentucky is 6%.

Terms to Know Loan Term – the length of a loan The loan term can be between 24-84 months (2-7 years) The average loan term length for a new car is 65 months.

Terms to Know Monthly Payment - the amount a borrower is required to pay each month until a debt is paid off

Terms to Know Total Cost of Buying a Car – The total cost of buying a car is the vehicle price, plus the additional sales taxes and applied interest

CAr Buying activity Use the Car Buying Spreadsheet to research cars at four different price points Under $10,000 $10,001 - $40,000 $40,001 - $75,000 $75,001 - $500,000 www.Cars.com

CAr Buying activity http://www.calculator.net/auto-loan-calculator.html Use this site to calculate the total cost of the four different cars at the four different interest rates. For this activity, we will put down 20% of the Vehicle Price as a Down Payment. We will assume our Loan Term is 48 months (4 years)