Buying and selling: Setting the context Activity 1 Bingo



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Consumer Education

Car prices and payment methods

Activity looking at the factors which influence the price of a car and the advantages and disadvantages of different ways of paying for a car. Includes illustrated 'for sale' and price cards, table of pros and cons of buying new and used cars

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Buying and running a car: Car prices and payment methods.

This document provides activities to use with learners/ participants/ service users; the material has been written to include education focuses on literacy, numeracy, functional skills and English for speakers of other languages within a formal education setting. However if you wish to use the activities within an informal group or as part of an awareness raising campaign you will only need p10 onwards

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|Unit/Activity name |Unit/ Activity focus |Consumer education objectives |Literacy, language and numeracy |Literacy curriculum |ESOL curriculum refs|Numeracy curriculum |Functional skills |

| | | |objectives |refs | |refs |standards |

|Unit 1 |Participate in discussion, record|Identify the advantages and |Follow and contribute to |SLd/L1.1 |Sd/L1.1c | |Sp & List L1 |

|Activity 2 |ideas and compare notes relating |disadvantages of different payment |discussions |SLc/L1.3 |Sc/L1.3a | | |

|Payment methods |to the advantages and |methods | | | | | |

| |disadvantages of different payment| |Present information in note form |Wt/L1.2 |Wt/L1.2a | |Writing L1 |

| |methods | | |Wt/L1.3 |Wt/L1.3a | | |

|Unit 1 |Compare costs using different |Develop skills and knowledge to |Use different reading strategies |Rt/L1.5 |Rt/L1.5a | |Reading L1 |

|Activity 2 |payment methods |compare costs using different payment |to compare information | | | | |

|Payment methods | |methods | | | | | |

|Extension activities | | |Evaluate numbers as percentage of | | | | |

| | | |other numbers | | |N2/L2.9 |Maths L2 |

| | | | | | | | |

| | | |Extract and interpret information | | | | |

| | | | | | | | |

| | | | | | |HD1/L1.1 |Maths L1 |

Buying and running a car: Unit 1 Activity 1 Car prices

|RESOURCES AND PREPARATION |

|Buying and running a car: Unit 1 Activity 1a Guess the price: Enlarge, copy, laminate and cut up one set of images and prices (one set will be shared by the whole group) - copy several sets of the answers so that all |

|learners have or share a copy |

|Extension activity 1: Car research |

|Access to the internet (optional) |

|Car magazines |

|Extension activity 2: New vs used? |

|Buying and running a car: Unit 1 Activity 1b New vs used?: one for each group or learner |

|Flipchart paper and marker pens |

|Access to the internet (optional) |

|NUMERACY FOCUS |

SUGGESTED PROCEDURE

• Divide the learners into small groups or pairs and give out the For sale cards so that everyone has or shares a car.

• Everyone reads the description for their car and estimates the price the car is being sold for.

• Everyone then stands up and sequences themselves in order of the guessed value of their car and stands in a semi-circle holding their For sale card so that everyone can see it. Alternatively, if learners are in pairs, one of the pair joins the semi-circle while the other directs their position based on where other people stand.

• Learners then say why they think they should be in the order they have chosen.

• Depending on the size of the group, learners then either blu-tac the cards on the wall or place on the floor or a large table in the agreed final order.

• Give out the price cards and learners try to match the prices with the correct car and blu-tac the price on to the chosen car. Again, discuss why they have made these choices and justify their decisions.

• Learners then compare their decision with the answers and discuss any discrepancies. Re-order cars by price if necessary.

• Whole group discussion on factors that might have affected the prices given. i.e. the cost of a second-hand car will vary depending on its model features and condition. In addition, where you buy the car will also influence its cost, whether from a private seller, a franchised dealer, or an independent dealer.

• Learners can then say which car they would choose to buy and why.

|Ideas for Level 2 and/ or extension activities |

|Extension activity 1: Car research |

|In pairs or small groups, learners choose one of the cars to research further. They need to consult a range of online and/ or paper-based price guides to get the recommended values for the car they have chosen. Type ‘car |

|advice’ for example, into a search engine. |

|Learners then calculate any differences between the guide price and advertised price provided. |

|Learners present their findings to the whole group and discuss possible reasons for price differences. |

|Extension activity 2: New vs used? |

|Divide learners into groups and provide each with a sheet of flipchart paper and pens. |

|Elicit/ provide the four main options and check that learners understand the difference between each option: |

|new unregistered car: order from a dealer |

|new pre-registered: buy from a dealer/ garage (for cars less than 6 months old and under 200 miles on the clock) |

|nearly new – buy from a dealer/ garage or private sale: no clear definition but likely to be less than 1 year old with under 30,000 miles on the clock |

|used car. |

|Each group needs to brainstorm ideas for advantages and disadvantages of each option. If time and ICT available, learners can be asked to undertake research on the internet. |

|Groups display and compare ideas. |

|Ask learners to compare their ideas with Buying and running a car: Unit 1 Activity 1b New vs used? for additional checking and discussion. Highlight the following: |

|new cars, on average, lose 40% of their value within three years |

|new cars do not need an MOT until they are three years old |

|insurance premiums are higher on new cars |

|the costs of repairs are higher on old cars. |

Buying and running a car: Unit 1 Activity 2 Payment methods

|RESOURCES AND PREPARATION |

|Flipchart paper and marker pens |

|Buying and running a car: Unit 1 Activity 2a Different payment methods answers: |

|one single sided copy of each page (for group checking stage) |

|a double-sided complete set for each learner |

|Internet access (optional) |

|Extension activity |

|Buying and running a car: Unit 1 Activity 2b Cash vs loan |

|Internet access (optional) |

|NUMERACY FOCUS |

SUGGESTED PROCEDURE

• Set the context by having a whole group discussion on how learners or their friends or family have paid for cars.

• Brainstorm all the different ways of paying for a car that learners can think of.

• Record each payment method on a separate flip chart sheet. Make sure all the following methods are included:

– Cash

– Personal loan

– Loan purchase

– Hire purchase

– Personal contract purchase

– Credit card

– Part exchange

• Display all the payment method sheets and briefly discuss each method and check that learners understand the difference between each one.

• Divide learners into groups and give each group a different payment method. Ask learners to create two columns: advantages and disadvantages.

• Learners brainstorm and record possible advantages and disadvantages for their payment method. If there is time learners can undertake research on the internet. See which.co.uk/cars/choosing-a-car/buying-a-car/car-finance and .uk/yourmoney/everyday_money/guides/buying_a_car.aspx

• Learners walk around, adding new ideas to each group’s sheet and leave their own sheet until last.

• Give out the relevant pages for Buying and running a car: Unit 1 Activity 2a Different payment methods answers to each of the original groupings. Each group compares the suggested answers with the compiled answers on the flip charts.

• Ask groups to briefly summarise the advantages and disadvantages for their payment method and then report back to the whole group.

• Whole group discussion on main findings. Ensure whole group discussion covers:

– the possible risks for some of the payment methods

– what the key decision factors might be.

|Ideas for Level 2 and/ or extension activities |

|Comparison of costs using different payment methods |

|Groups of learners select a car to ‘buy’ from the car cards in the ‘Guess the price’ activity. They need to compare the cost of paying cash for the car with using finance. In order to do this they need to collect |

|information about loans and compare rates, then calculate repayments and total price paid. They can record the answers for their chosen car on the blank forms from Buying and running a car: Unit 1 Activity 2b Cash vs |

|loan. |

|Ideas for support and differentiation |

|Learners needing more support can be given completed examples to discuss and use as a model from Buying and running a car: Unit 1 Activity 2b Cash vs loan. |

|Loan repayments can be calculated using this tool: .uk/yourmoney/interactive/loan_calculator.aspx |

|Examples can be copied and given to learners needing more support. |

Cars for sale

For sale

|Honda Jazz, i-DSi | |

|1.4 litre engine | |

|Year: 2007 | |

|Mileage: 46,000 miles | |

|Very good condition | |

For sale

|Peugeot 307, LX 5d | |

|1.4 litre engine | |

|2002 | |

|Mileage: 80,000 miles | |

|Very good condition | |

For sale

|Audi A4 saloon, | |

|Quattro 4d | |

|2.0T litre engine | |

|2009 | |

|Mileage: 8,010 miles | |

|Excellent condition | |

For sale

|Mazda 626 | |

|5d saloon | |

|1.8 litre engine | |

|1999 | |

|Mileage: 116,000 miles | |

For sale

|Vauxhall Corsa | |

|3d hatchback | |

|1.4 litre engine | |

|2011 | |

|Mileage: 8,000 miles | |

For sale

|Citroen C2 | |

|5d hatchback | |

|1.4 litre engine | |

|2007 | |

|Mileage: 8, 211 miles | |

Price cards

|£5 135 |

|£1 329 |

|£15 661 |

|£342 |

|£8 228 |

|£4 453 |

Guess the price answers

|Honda Jazz |£5135 |

|Peugeot 307 |£1329 |

|Audi A4 Saloon |£15661 |

|Vauxhall Corsa |£342 |

|Mazda 626 |£8228 |

|Citroen C2 |£4 453 |

| |Advantages |Disadvantages |

|New unregistered |Can select colour and other specifications |More expensive to buy |

|car |Should come with a warranty |Will lose value very quickly through depreciation |

| |Does not need an MOT for the first three years |Warranty may tie you into dealer for servicing |

| |May be less likely than a used car to break down, making | |

| |breakdown cover less essential | |

| |For comparable models, the car may be more fuel efficient | |

| |than an older car | |

| |May be more environmentally friendly than an older car | |

| |Buying from a dealer you are protected by the Sale of Goods | |

| |Act | |

|New |Cheaper than buying an unregistered car |Cannot choose colour or other specifications apart from |

|pre-registered |Should come with a warranty |selecting from what is available in dealerships |

| |Does not need an MOT for the first three years |Will lose value very quickly through depreciation |

| |Will only have delivery mileage on it (should be less than |Warranty may tie you into dealer for servicing |

| |200 miles on the clock) |Warranty terms may not be as good as for an unregistered car |

| |May be less likely than a used car to break down making |The car may have been in multiple locations before you buy it|

| |breakdown cover less essential | |

| |For comparable models, the car may be more fuel efficient | |

| |than an older car | |

| |May be more environmentally friendly than an older car | |

|Nearly new – from|Much cheaper than buying a new car |There could be faults with the car |

|a dealer/garage |Does not need an MOT if it is under three years old |The car could have been in an accident or even stolen |

|or private sale |Will not lose so much value through depreciation |You do not have as much legal protection if you buy from a |

| |If you buy through a dealer you are protected by the Sale of |private seller |

| |Goods Act | |

| |May be more environmentally friendly than an older car | |

|Used car |Cheaper than new or nearly new cars |There could be faults with the car |

| |Will lose the least value through depreciation |The car could have been in an accident or even stolen |

| |You will need to get an MOT if the car is three or more years|You do not have as much legal protection if you buy from a |

| |old |private seller |

| |If you buy through a dealer you are protected by the Sale of |Maintenance costs will generally be higher than for a new car|

| |Goods Act |For comparable models, a used car may be less fuel efficient |

| | |than a new car |

| | |May be more likely than a new car to break down so you may |

| | |want to consider purchasing breakdown cover |

| | |May be less environmentally friendly than a newer car |

|Method |Advantages |Disadvantages |

|Cash |You don’t have to pay interest so will therefore pay less for the car. |If it is a private sale that is dodgy you could end up losing all of your money. |

|Provided by: |You may be able to negotiate for a better deal than the advertised price as a |If you don’t have the money saved up you may have to wait a long time to buy a car. |

|you from your savings |cash buyer. | |

|money borrowed from friends or family | | |

|perhaps an insurance payout. | | |

|Method |Advantages |Disadvantages |

|Personal loan |You don’t have to save up a large sum before buying the car so you may be able |If it is a private sale that is dodgy you could end up losing all of your money. |

|Provided by: |to buy the car sooner. |You will have to pay much more than the advertised price as you will pay interest. |

|bank |You may be able to negotiate for a better deal than the advertised price. |You may not be able to afford the repayments if your personal circumstances change. |

|building society |It can help with budgeting because you know what the repayments will be if you |Interest rates vary so you will need to look around. |

|credit union etc. |get a fixed rate loan. |There may be arrangement fees and early exit penalties. |

| | |You may not be credit worthy if you have had problems with credit in previous finance |

| | |agreements. |

| | |There are some unscrupulous people (loan sharks) who may try to get you to take out a loan|

| | |with them. |

|Method |Advantages |Disadvantages |

|Loan purchase |It may suit some people as it may be less hassle than going elsewhere for the |You will have to pay much more as you will pay interest. |

|Arranged by: |loan. |You may not be able to afford the repayments if personal circumstances change or interest |

|the car dealer. |It can help with budgeting because you know what the repayments will be if you |rates change. |

|How it works: |get a fixed rate loan. |Interest rates vary so you will need to look around. |

|it is similar to a personal loan but you borrow the |The consumer can take action directly against the finance company for any |The interest rates are usually very high. |

|money from a finance company introduced by the |breach of contract. |You may have to pay a large deposit. |

|dealer and buy the car from them. | |There may be arrangement fees and early exit penalties. |

| | |You may not be credit worthy if you have had previous problems with credit so you may have|

| | |trouble getting a loan. |

|Method |Advantages |Disadvantages |

|Hire purchase |You may have the flexibility of returning the car when the plan is reviewed. |You don’t own the car until you have made all of the payments. |

|Arranged by: |As you don’t own the car, the finance company, as owner, may be responsible for|There may be a large final lump sum payment to be made before you own the car. |

|the car dealer. |sorting out any faults with the car. |You may not be able to afford the repayments if personal circumstances change. |

|How it works: |The consumer can take action directly against the finance company for any |You will have the car repossessed if you can’t keep up the payments. |

|it usually involves putting down a small deposit and|breach of contract. |If you return the car before completing the payments you may still be liable for any |

|signing up to a monthly payment plan which may be | |damages – even small scratches. |

|reviewed at some point. | |There may be arrangement fees and early exit penalties. |

| | |You may not be credit worthy if you have had previous problems with credit so you may have|

| | |trouble getting hire purchase. |

| | |The finance company sometimes sets a maximum mileage and you will have to pay a penalty if|

| | |you exceed it. |

|Method |Advantages |Disadvantages |

|Personal contract plan |A deposit may not be required with this method. |The price of the car is usually fixed so you cannot negotiate a better deal. |

|Arranged by: |The repayments may be lower than a personal loan or loan purchase. |There may be a large final lump sum payment to be made before you own the car. |

|the car dealer. |You can trade the car in for a newer model at an agreed point in the repayment |You don’t own the car until you have made all of the payments. |

|How it works: |process. |You will have the car repossessed if you can’t keep up the payments. |

|the buyer pays off part of the cost of the car over |It can help with budgeting because you know what the repayments will be if you |There may be arrangement fees and early exit penalties. |

|an agreed period, then either pays a lump sum |get a fixed rate. |You may not be credit worthy if you have had previous problems with credit so you may have|

|(balloon payment) to purchase the car or trades up |As you don’t own the car, the finance company may be responsible for sorting |trouble accessing this method of payment. |

|for a newer model. |out any faults with the car. |The finance company sometimes sets a maximum mileage and you will have to pay a penalty if|

| |The car has a minimum guaranteed future value. |you exceed it. |

| |The consumer can take action directly against the finance company for any |You are liable for any damage to the car during the repayment process. |

| |breach of contract. | |

|Method |Advantages |Disadvantages |

|Credit card |It can be a convenient way of getting a little extra time (up to a month) to |There might be an extra charge for credit card payments. |

|Provided by: |pay for the car. |Not all car dealers or car sales outlets accept credit cards. |

|banks |You will have some protection from your credit card company if the deal turns |If you don’t pay the amount in full you will be charged interest and credit card interest |

|building societies |out to be problematic. |can be very high. |

|another lender. |Some credit cards offer interest-free introductory periods for new customers. |If you get an interest-free deal on a credit card but cannot pay off the whole balance |

| |You may be able to negotiate a better deal than the advertised price. |within the agreed time the interest rate can be very high afterwards. |

|Method |Advantages |Disadvantages |

|Part exchange |It saves you the trouble of trying to sell your old car. |You will probably not get as much money for your old car as you could if you sold it |

|Provided by: |It may be quicker than trying to sell your old car yourself. |privately. |

|the car dealer. |You may be able to negotiate a good deal with the dealer. | |

|How it works: | | |

|If you’re buying a new car, as well as selling your | | |

|old one, you can do it using a part exchange scheme | | |

|with a car dealer. The value of your old car is | | |

|deducted from the cost of the new car. | | |

|Method |Advantages |Disadvantages |

|0% finance |You are not paying interest on your repayments. |It’s expensive on a monthly basis. |

|Arranged by: |If you can afford the monthly payments but you don’t have all the money at the|It isn’t available on all cars. |

|the car dealer. |time, you can buy the car. This allows you to buy without paying more than |You’re unlikely to get a discount on a 0% deal so it could work out more expensive |

|How it works: |the cost of the car. |overall. |

|you pay a deposit, often 35 to 40% of the car’s |You can take action against the finance company for any breach of contract. |Only a small percentage of car loan borrowers qualify for this type of loan. |

|price – and then there’s no interest on your | |You will need to check whether payments are divided equally as there may be a large |

|monthly instalments. | |final lump sum payment to be made. |

|Method |Advantages |Disadvantages |

|Car leasing |Good for those who want a new car regularly without the hassle of owning it |You normally pay a few months’ rental in advance. |

|Arranged by: |themselves. |You have to take out comprehensive insurance to cover damage, which is costly for |

|the car dealer. |Monthly payments can be low and there is nothing to pay at the end. |expensive cars. |

|How it works: |Generally only a small deposit is required. |The car is never yours. |

|you choose your vehicle and how long you want it |Maintenance may be included in the deal. |You will be charged for exceeding your mileage limit. |

|for and state your annual mileage. These three |You can take action directly against the leasing company for any breach of | |

|factors determine your monthly payments. |contract. | |

|Example 1 Car: Citroen C2 |

|Cash price |£5500 |

|Loan interest rate (APR) |14.9% |

|Period over which loan repayments made |5 years |

|Monthly repayment |£130.56 |

|Total repayments |£7833.37 |

|Difference between cash price and total repayments on loan |£2333.37 |

|Example 2 Car: Fiat Punto |

|Cash price |£600 |

|Loan interest rate (APR) |42.6% |

|Period over which loan repayments made |1 year |

|Monthly repayment |£63.50 |

|Total repayments |£761.99 |

|Difference between cash price and total repayments on loan |£161.99 |

|Example 3 Car: Audi A4 |

|Cash price |£25750 |

|Loan interest rate (APR) |9.9% |

|Period over which loan repayments made |5 years |

|Monthly repayment |£548.85 |

|Total repayments |£32750.72 |

|Difference between cash price and total repayments on loan |£7000.72 |

|Example 1 Car: |

|Cash price | |

|Loan interest rate (APR) | |

|Period over which loan repayments made | |

|Monthly repayment | |

|Total repayments | |

|Difference between cash price and total repayments on loan | |

|Example 2 Car: |

|Cash price | |

|Loan interest rate (APR) | |

|Period over which loan repayments made | |

|Monthly repayment | |

|Total repayments | |

|Difference between cash price and total repayments on loan | |

|Example 3 Car: |

|Cash price | |

|Loan interest rate (APR) | |

|Period over which loan repayments made | |

|Monthly repayment | |

|Total repayments | |

|Difference between cash price and total repayments on loan | |

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Buying and running a car

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