Buying a Car

The sticker price is the smallest part.

12 problems · about 22 minutes · TEKS M.M.5.A

What this lesson teaches

The student computes the total cost of car ownership including financing, depreciation and running costs.

A car costs its price plus depreciation, fuel, insurance, maintenance and interest.
A new car commonly loses 20% of its value in the first year.
Compare cars on total cost per year, not on the monthly payment.

Straightforward practice. Get the method working first.

5 problems

A $25000 car loses 20% in year one. Loss in dollars?
Answer 5000
Why $5000.
Why is negotiating on the monthly payment risky?
Answer A longer term lowers the payment while raising the total cost.
Why Stretching the term hides a larger total.
A $30000 car loses 20% in year one. Loss in dollars?
Answer 6000
Why 0.20 × 30000.
That car is now worth how much, in dollars?
Answer 24000
Why 30000 − 6000.
Fuel $1800, insurance $1000, maintenance $700. Total in dollars?
Answer 3500
Why Add them.

The same ideas with more to keep track of.

3 problems

$350 a month for 60 months. Total paid in dollars?
Answer 21000
Why 350 × 60.
Total costs $40000 over 5 years. Cost per year in dollars?
Answer 8000
Why 40000 ÷ 5.
A $20000 car losing 15% in year one. Loss in dollars?
Answer 3000
Why 0.15 × 20000.

Mixed problems. Work out what kind of question it is before you start.

4 problems

Which belong in the total cost of owning a car?
Answer Depreciation; Insurance; Loan interest
Why The sticker price is one component, not the total.
A $16000 car losing 25% in year one. Loss in dollars?
Answer 4000
Why 0.25 × 16000.
The Drop: A $24000 car loses 20% in year one. How much value is lost, in dollars?
Answer 4800 dollars
Why $4800.
The Running Cost: Fuel $1500, insurance $1200, maintenance $600. Annual running cost in dollars?
Answer 3300 dollars
Why $3300.