Comparing Car Loans - Thompson School District R2-J

[Pages:2]Comparing Car Loans

Molly just got a new job and wants to upgrade her junky old car for a shiny new 2016 Jeep Patriot. She saw the following deal on the Jeep website and is interested in calculating what her monthly payments would be with the two finance offers available. Use the auto loan calculator at to calculate her car payments with these two options.

Note: MSRP means Manufacturer's Suggested Retail Price, and we will assume that is the price

Molly will pay at the dealership.

Option 1: Molly paying 0% APR for 36 months 1. If Molly has a $2500 down payment saved for this purchase, and assuming the $1500 Cash Allowance

will come straight off the car's price, how much of a loan does Molly need?

2. Molly doesn't want to pay any interest, so she wants to see how much it would cost to pay off the car in the 36 months she has the 0% APR. Use the loan calculator to determine how much will Molly's monthly payment would be for the car. (You will need to put in .001 for interest, it won't let you use zero).

Option 2: Molly paying 1.9% APR for 84 months 3. Molly still has her $2500 down payment saved for this purchase, and assuming the $500 Cash

Allowance will come straight off the car's price, how much of a loan does Molly need?

4. With the 1.9% APR over 84 months option, use the loan calculator to determine how much will Molly's monthly payment would be for the car.

5. Click "Show Amortization Table," which shows all the details of her payments and interest. How much total interest will Molly pay using this plan?

6. Including interest, and the amount she paid down, how much would the car cost her total with this plan?

7. After seeing how much more affordable this plan is, Molly wants to see what her plan would look like if she contributed $100 more per month. Under "Add Extra Payments", put $100 in "to your monthly auto loan payment". a. Now how much is her monthly payment?

b. And how much total interest will Molly pay?

c. Including interest, and the amount she paid down, how much would the car cost her total with this plan?

8. Of the three options you researched, which plan do you think she should choose and why?

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