Auto Loan Assignment
Car Loan Assignment
30 points
We have been reading and talking about personal finance decisions that you will likely be making in
the years to come. Buying a car can be a lot of fun, but it also requires research and an
understanding of automobile financing. Here’s your chance to experience the car buying process
without actually spending a dime!
1. Find an advertisement for a car that you would like to purchase. Remember to consider the
primary use of the car and your own financial situation. Listed here are a few resources that
should help you find the car that best meets your needs:
www.edmunds.com www.cars.com www.ebay.com
Write ONE PARAGRAPH about why you chose this car.
2. After you’ve decided on the car of your choice, take a few minutes to review the auto loan form
at https://www.eloan.com/s/show/auto?context=auto .Fill out the application and insert a
screenshot into your assignment.
3. Once you have found the automobile of your choice and have determined the amount you
will be spending on the car, you need to calculate the monthly payments. The "Amortization
Calculator" at http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspxwill be
helpful in calculating the monthly payments according to the amount of borrowed principal.
Calculate the monthly payment for your car for each term option below (3, 5, and 6 years).
Choose the credit rating that you think you would receive based on our discussions in class.
Terms (as of 9/21/06) Excellent Credit Good Credit Average Credit Fair Credit
3 years (36 payments) 5.99% 7.14% 7.54% 8.14%
5 years (60 payments) 6.35% 7.69% 8.24% 9.30%
6 years (72 months) 6.89% 8.64% 9.44% 10.40%
Your findings for each loan option should be presented as follows, so you will be calculating
this information three times:
Loan amount _________________
Term _________________
Interest rate _________________
Monthly payment _________________
Total cost of loan (monthly payment * # of payments) _________________
4. Tell what you think your best loan option would be and justify that conclusion. A high-
quality explanation will include why you decided not to take the lowest interest rate, the
smallest monthly payment, the shortest term, or the loan with the lowest cost.
Car Loan Assignment
30 points
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