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PowerPlay Money Managers

PowerPlay Money Managers. Lesson 2: My First Car. Objectives. By the end of this lesson you will be able to: Identify costs associated with owning a vehicle Explain how a car loan works and list the factors that can impact the monthly financing costs.

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PowerPlay Money Managers

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  1. PowerPlay Money Managers Lesson 2: My First Car

  2. Objectives • By the end of this lesson you will be able to: • Identify costs associated with owning a vehicle • Explain how a car loan works and list the factors that can impact the monthly financing costs. • List several realistic options for transportation for students when attending post secondary school.

  3. Materials Needed • Activity Sheet 2.1 “Researching my Dream Car” • Activity Sheet 2.2 “Group Scenario” • Activity Sheet 2.3 “My First Car”

  4. Activity 1 • Distribute Activity Sheet 2.1 “Researching My Dream Car” • Tips: • Work in groups of 5 or 6 to brainstorm ideas, but each person must give details their own personal dream car. • Choose a more common type of car (not a Lamborghini) • The car must cost less than $70,000 • Include a lot of detail: • Type of vehicle (sports car, sedan, truck or SUV) • Colour • Special Features (rims, tinted windows, spoilers or stereo) • Transmission (automatic or standard) • Make groups of 3 and each person will describe their dream car to the others for 1 minute.

  5. Activity 2 • Now we are going to participate in an activity to see who understands cars best. • As a class we will use an example of a “dream” car to determine the monthly expenses.

  6. Overhead 2.1 “Sample Vehicle” • Vehicle: • 2008 Chevrolet Cobalt LT • 2.2 litre • 4 cylinder Calculate the cost to finance, maintain and insure this car.

  7. Distribute Activity Sheet 2.1 “Group Scenario” • Each of you are responsible for determining the cost to purchase, maintain and insure the sample vehicle based on the information provided. • The group or person that calculates the closet estimate wins.

  8. Step 1: Financing • Each group determines their estimate of the monthly payment for the vehicle loan. • Estimates are recorded in the appropriate box on your estimating worksheets. • Volunteer to record your responses on the whiteboard. • We will use Overhead 2.2 “Total Purchase Price” to help make accurate estimates.

  9. Overhead 2.2 “Total Purchase Price”

  10. Questions • What is a down payment? • Why would banks want you to have one?

  11. Overhead 2.3 ‘Loan Calculator’ • To demonstrate how monthly payments are calculated for loans. • Input: • Loan amount • Term in months • Interest rate • Calculate: • Monthly payment • Total interest paid

  12. Overhead 2.4 ‘Monthly Loan Payments’Answers

  13. Results • Which group was the closest to the actual amount? • What did you learn from this step? • How could you decrease the monthly payment amounts?

  14. Overhead 2.5 ‘Impact of Interest Rates’

  15. Overhead 2.6‘Impact of Payment Terms’

  16. Questions • What does this exercise tell us about financing? • What is the advantage of using different payment terms? • When would it be appropriate to use a shorter term? • Do people have different interest rates? • Yes, different banks compete with each other by offering lower rates. • By shopping around people can sometimes get lower rates.

  17. Step 2: Insurance. • In your groups estimate the cost for insuring the vehicle. • Volunteer to record responses on the whiteboard. • Would the insurance cost more for a sports car than a sedan? • Absolutely

  18. Overhead 2.7‘Monthly Insurance Costs’

  19. Question • Which group had the closest estimate for the cost of monthly insurance?

  20. Overhead 2.8‘Insurance Cost Factors’ • Factors Impacting BC Automobile Insurance Costs • Rate classes • Where you live • Your claim record • The vehicle you drive • Additional coverage • Source ICBC.com

  21. Step 3: Maintenance • In your groups estimate the cost for maintaining the vehicle. • Consider the different types of expenses associated with operating a vehicle (i.e. gas maintenance and tires). • Volunteer to record responses on the whiteboard.

  22. Overhead 2.9 ‘Monthly Maintenance Costs’

  23. Questions Which group had the closest estimate? What are the hidden costs associated with owning a vehicle?

  24. Overhead 2.10‘Total Monthly Costs’

  25. Discussion • How realistic is owning a new vehicle for young adults? • What are other forms of transportation? • Purchasing a used car. • Borrowing parents car. • Using transit system. • Using a bike.

  26. Homework • Distribute Activity Sheet 2.3 ‘My First Car’ • Due at beginning of next class. • Don’t forget to have your parents sign the sheet!

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