Lab Description
This interactive lab drives students into the world of auto financing. Students will understand the need for a car loan to achieve their dream goal of owning a car. The lab is divided into two sections - "Car Loan Basics" and "Car Loan Options and Risks", each section containing reading materials, several interactive worksheet activities, quizzes, and writing activities.
At the end of every section, teachers are provided with materials to conduct classroom discussions that will reinforce student learning.
1. Car Loan Basics
- Before diving into car loan details, students will do a quick start activity to help John save for his dream car.
- Understand the need for a car loan to achieve a car dream faster.
- Learn about car loan-related terms such as down payment, principal amount, interest rate, etc.
- Understand the difference between APR and interest rates.
- Learn about factors affecting the APR, such as credit score, loan duration, etc.
- Understand and analyze an amortization schedule
2. Car Loan Options and Risks
- Analyze the difference between leasing a car vs. buying a car with a loan, and analyze a sample lease agreement to understand the financial benefits of each.
- Understand the need to adjust their budget for a new car.
- Do a worksheet to find the total cost of car ownership and understand that it is not just the loan payment, but fuel cost, insurance, etc. and they should be considered in the budget.
- Read about the car loan pitfalls such as predatory lending tactics.
- Use the internet to compare their two favorite cars in terms of the given parameters.
- Read the story of Sarah, who impulsively purchased a luxurious car and ended up in financial trouble
This comprehensive car loan education lab is designed to provide students with a solid foundation in car loans through interactive and practical activities, empowering them to navigate the intricacies of personal finance.
Who this course is for
Middle and High school students
Student Feedbacks
We asked students, what you remember the most about the lab, and here are some of the responses
Car Loan Basics (86 Minutes)
Before delving into the intricacies of car loans, students will engage in a quick start worksheet activity to estimate the number of years needed to purchase a car solely through saving a portion of their salary. This preliminary activity serves as an introduction to the subsequent quick-start worksheet activity.
Sub Activities
- Saving for a New Car
Students will read and understand that a car loan is a financial tool that provides the necessary funds to buy a vehicle that they might not be able to afford outright with cash. Students will also understand about key terminologies like - down payment, interest rate, loan duration, and monthly payments.
Sub Activities
- Review Questions
- Searching for loans
Students will understand the typical car buying process - from planning, budgeting, car research, saving for the down payment, researching car loan offers and finally getting a car loan.
Sub Activities
- Helping John Choose a Car Loan
From the previous activity, students understood that John would have to repay a substantial amount of interest along with the money he borrowed. Students will understand the factors that affect the total interest to be paid, such as loan duration, interest rate, etc.
Sub Activities
- Effect of Loan Duration
- Effect of Interest Rate
Students will read and understand that it is not just the interest rate that matters but there are many other fees such as origination fee, closing fee, etc. because of which they can not compare two lenders using just the interest rates. Then they will understand what is APR - Annual Percentage Rate, and its importance.
Sub Activities
- Review Questions
Students will do three worksheet activities to find out the effect of
- Loan Duration
- Down Payment
- Credit Rating
on APR.
Sub Activities
- APR and Loan Duration
- APR and Down Payment
- APR and Credit Rating
- APR Summary
- How are credit scores calculated?
Students will read and understand what Amortization schedule is and its importance.
Sub Activities
- Amortization Schedule
- Why the surge in interest?
Students will read about different types of car loans such as
- Dealership Financing
- Bank and Credit Union Loans
- Online Lenders
Sub Activities
- Review Questions
Car Loan Options and Risks (85 Minutes)
In this activity, students will read the difference between leasing a car and buying a car with a loan. They will go through the pros and cons of each method.
Sub Activities
- Review Questions
- Leasing Worksheet
- Leasing or Buying?
Students will read about considering car loans in their budget, such as evaluating discretionary spending, what portion of that can be allocated to car loans, considering debt-to-income ratio, using the 20/4/10 rule, etc.
Sub Activities
- Review Questions
- Total Cost of Owning a Car
Students will read about Predatory lending tactics such as No credit check, Hidden fees and charges, Pressure tactics, Guaranteed approval, etc.
Sub Activities
- Review Questions
Students will read about striking a balance between needs and wants in car buying.
Sub Activities
- What car would you prefer?
- Car Comparison
Students will read the story of Sarah, who made an impulsive decision to purchase a luxury car despite considering her budget constraints. Over time, Sarah began to regret her impulsive decision. The financial strain, coupled with the realization that the car did not align with her practical needs, caused her dissatisfaction.
The objective of the activity is to let students understand the potential problems associated with impulsive purchases and the need to do comparisons, current financial situation analysis, etc.
Sub Activities
- Letter to Your Friend
- Price per Classroom$8 00$50.00
- Duration 3.5 Hours
- Activities 47
- Grade 8-12