MAT 1010 Car Buying Lab
CAR BUYING
Adapted by Sarah Greenwald from a lab by Greg Rhoads

This lab should be done in pairs. Each pair should turn in one copy of this sheet, the printouts from the web, and a letter addressed to parents, a rich relative or friend.
1. One person from your pair will start up Netscape. The other will start up Excel and open up an amortization table from the house buying lab.
2. You are going to purchase a car using the web to help you.

Go to Edmunds page. To do this, click on edmund.com/edweb/. Be patient, as it may take awhile. Follow the links on their page to find a new or used car you wish to buy. List the nonstandard options you wish to purchase along with their p\ rice. Always use the list price. Print out the web sheet on your desired car.
What is the final price of your car with all options? __________________________


To get actual rates and payment information, and to have the ability to immediately apply on-line, Edmund's recommends visiting www.CarFinance.com/edmunds/fin.mcgi for a free, no obligation quote. Enter in the relavant information onto this page and then click on 6 to view the rates. Print out the web sheet with your rates

3. Use Excel to compare payment options. Assume you will put 10% down on your car. Fill in the following chart using your Excel worksheet.


PERIOD PAYMENT TOTAL COST TOTAL INTEREST
36


48


60


72




4. Assume the bank allows a 35% debt-to-income ratio and assume you have the following monthly debts:

rent = $425.00
student loan = $80.00
insurance = $40.00
credit card minimum payments = $50.00
car payment=?

Determine what your annual income should be to get each loan.


LOAN PERIODANNUAL INCOME
36
48
60
72



5. You also have the option of leasing your car for 3 years. Use http://edmund.com/edweb/leasing.html Edmund's Do-It-Yourself Guide to Leasing
to help you investigate this option. Read the above Edmund's web page to obtain the details about leasing.
The amount the value of the car decreases is the amount you will be expected to\ pay over the 3 year period. Use this Edmund's web page and excel to determine the monthly lease payment for your car.
1998 Toyota Camry LE V6 (MSRP) $
Capitalized Cost $
Destination Charge $
Acquisition Fee $
Security Deposit $
(refunded at end of lease)
Capitalized Cost Reduction $
(destination charge + acquisition fee)
Total Payment Due at Lease Signing $
(security deposit + cap. reduction)
Residual Value after 3 years (55% of MSRP in this example) $
Term Depreciation (Capitalized Cost - Residual Value) $
Money Factor (Interest Rate divided by 24)
Monthly Lease Rate (Capitalized Cost + Residual Value x .0031) $
Monthly Depreciation (Term Depreciation divided by Lease Term) $
State Sales Tax (Monthly Depreciation + Monthly Lease Rate x Sales Tax Rate [6.5% in this example]) $
Monthly Payment (Monthly Depreciation + Monthly Lease Rate + State Sales Tax) $

Writing Assignment

Decide whether you would like to buy or lease your desired car. Write a letter to a parent, rich relative or friend asking them to make your car payments for you until you get out of college. Present a case to them; explain the research you have done and your reasons for choosing to buy/lease versus lease/buy, as well as your reasons for getting the car now instead of when you obtain a job after graduating. Be sure to tell them what the total cost to them will be and be sure to give credit to Edmunds. Include your web pages and the filled out charts (this page) as appendices. TRY THIS: Try actually reading or sending your letter to the person you choose to write to. Do they understand your case?
Due by on October 9 by Fri at 5pm

Deep Exploration - To explore deeply, explore and include something else in addition to the above.