Car Loan - Effect of Loan Duration

Activity Description

In this worksheet, students will explore the relationship between loan duration, monthly payment, and total interest to be paid for a car loan. The scenario involves a $40,000 car loan at an interest rate of 5%. Students will use a slider to adjust the loan duration and observe how it affects the monthly payments and total interest. They will record their observations in a data table to understand how loan duration influences overall loan costs.

Activities:

• Scenario Presentation: Students will be presented with a car loan scenario - Loan amount: $40,000 and Interest rate: 5%.
• Slider Activity: Students will use a loan calculator with a slider to adjust the loan duration. The calculator will display the monthly payment and total interest based on the selected loan duration.
• Data Recording: Students will fill in a data table with the values of monthly payment and total interest for different loan durations, such as 1 year, 2 years, 5 years, 8 years and 10 years.
• Reflection: Guided questions will help students reflect on the importance of choosing an appropriate loan duration based on their financial situation and goals.

Key Learning Outcomes:

• Loan Duration Awareness: Students will understand how loan duration affects monthly payments and total interest.
• Financial Data Analysis: Students will develop skills in analyzing financial data related to loan agreements.
• Informed Financial Decisions: This worksheet will help students appreciate the significance of loan duration in making informed financial decisions when taking out loans.

Learning Objective

Students will use the interactive worksheet to learn about the effect of loan duration on the total interest paid and the monthly payments. With the help of an interactive slider and graph, they will figure out the monthly payments and total interest for different durations.

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