Car Loans
Living on Your Own -- Let's Calculate the Cost!

1) Use Yahoo Autosmart (http://autos.yahoo.com/) and choose three cars to research:

For all three cars, assume you will take out a three-year loan. Find the information to fill in the table below.

Interest rate = 7%
Loan term (time) = 3 years (36 months)

P= principal (price of car)
R= interest rate
T= time

 3 Year Loan Car Model Price(P) Interest (I) (I=PRT) -- Use time in years Loan Total (LT) (LT=P+I) Monthly Payment (LT/time in months) Car A Car B Car C

2) Now repeat #1, using 4 years as the loan term.

 4 Year Loan Car model Price (P) Interest (I=PRT) Loan Total (LT=P+I) Monthly Payment (LT/time) Car A Car B Car C

3) Now repeat #1, using 5 years as the loan term.

 5 Year Loan Car Model Price(P) Interest (I=PRT) Loan Total (LT=P+I) Monthly Payment (LT/time) Car A Car B Car C
*Please note: All car owners are also responsible for paying for gasoline, car maintenance, and auto insurance.

What is the monthly payment for car A for 3 years? 4 years? 5 years?

What is the difference in the Loan Total for car A and car B for 3 years?

For car B, what is the difference in the Loan Total for a 3-year loan and a 5-year loan?

What is the difference in Interest for car C for a 3-year loan and a 5-year loan?

What is the advantage of a 3-year loan compared to a 5-year loan? What is the disadvantage?