Download Report

BETTER MONEY HABITS HIGH SCHOOL LESSON:
THE TRUE COST OF A CAR
LESSON 9 -- OWNING A CAR
LESSON DESCRIPTION AND BACKGROUND
Using the Better Money Habits video The True Cost of a Car (www.bettermoneyhabits.com),
this lesson introduces students to the various costs associated with buying and operating a
car, including monthly payments, gasoline, insurance, and maintenance. It also stresses the
importance of comparative shopping when making a major purchase. This lesson can be used
in conjunction with Lesson 18: Financing a Car in Financial Fitness for Life, Grades 9-12. The
video is 4 minutes, and the estimated time for this activity is one 45 minute class period.
In this lesson, students will be placed in groups and assigned different types of vehicles to
compare the costs for each type. It will require students to use an online calculator or other
tools to compute monthly payments, explore insurance options, calculate gasoline expenses,
determine basic maintenance costs, and investigate required fees such as registration and car
tags.
BETTER MONEY HABITS VIDEO
Car Buying: Preparing to Buy or Lease: The True Cost of a Car (4:00)
FINANCIAL FITNESS FOR LIFE CONNECTION, GRADES 9-12
Lesson 18: Financing a Car
ECONOMIC AND PERSONAL FINANCE CONCEPTS




Insurance
Interest
Decision-making
Comparison shopping
NATIONAL STANDARDS FOR FINANCIAL LITERACY
Standard 2. Buying Goods and Services, Benchmark Grade 12
1. Consumer decisions are influenced by the price of a good or service, the price of
alternatives, and the consumer’s income as well as his or her preferences.
BETTER MONEY HABITS: HIGH SCHOOL
1
BETTER MONEY HABITS HIGH SCHOOL LESSON:
THE TRUE COST OF A CAR
3. When buying a good, consumers may consider various aspects of the product including the
product’s features. For goods that last for a longer period of time, the consumer should
consider the product’s durability and maintenance costs.
5. People incur costs and realize benefits when searching for information related to their
purchases of goods and services. The amount of information people should gather depends on
the benefits and costs of the information.
OBJECTIVES
At the end of this lesson, the student will be able to:
 Explain the costs of owning and operating a car.
 Calculate the potential costs of owning and operating a car.
TIME REQUIRED
One 45 minute class period
MATERIALS
Handout 9.1: Owning a Car
Computer Access, if possible
Otherwise: Calculator, magazines, newspapers, or other sources of information about vehicles
PROCEDURE
1. Ask students if they have ever considered buying a car or if they currently own a car. Have
them identify potential costs they may have when owning a car. Explain they will
participate in a project where they determine what kind of car is best for their family.
2. Ask students to discuss some of the reasons so many different types of vehicles are
available to purchase today and how the car they drive will meet their needs to get to
school or to go to their job. Remind students that different types of vehicles will have
different kinds of costs.
3. Introduce the video Better Money Habits: Car Buying: The True Cost of a Car. Distribute
Handout 9.1: Owning a Car. Tell students to use Part A of the handout to record the
information presented in the video. After viewing the video, review the handout with the
class.
4. Put students into groups and provide them a copy of Part B of the handout. Assign each
group a different type of vehicle (sports car, new truck, used SUV, etc., or have students
make their own selection; be sure groups are choosing a variety of vehicles to maximize
the purpose of this lesson).
BETTER MONEY HABITS: HIGH SCHOOL
2
BETTER MONEY HABITS HIGH SCHOOL LESSON:
THE TRUE COST OF A CAR
5. Have students research their selected vehicle, using online or provided sources. Have
them record their findings on Part B of the handout.
6. Ask each group to share their findings with the rest of the class. You may want to put each
group’s information on the board or on a bulletin board to better compare their results.
7. Debrief the activity by asking students what factors or costs seemed to make the biggest
difference when comparing the different vehicles. You may also want to remind students
that they may choose to save money for a down payment to reduce the monthly costs or
save money to purchase a car to save the monthly payment and interest costs.
Note: Alternative to Part B. Have students respond to the following:
Based on your own personal situation, what factors presented in this video are the most
important costs for you or your family to consider when buying a car? Be sure to explain
the reason for your answers.
CLOSURE
To summarize this lesson, remind students that buying a car is similar to buying other goods
and services. It is important to comparison shop and find the vehicle that best meets their
needs. Buying a smaller, less expensive car may not be as stylish as driving a sports car or
big truck, but the money saved can be used for future purchases such as a college education.
In addition, the type of car purchased will have an impact on the other costs associated with
owning and operating one.
ASSESSMENT
Have students select which of the vehicles researched by the groups would best fit their
individual or family situation and prepare a written summary explaining why it would be their
best choice.
EXTENSION
Have students write a “tip sheet” to share with their friends, including things to consider when
purchasing a car.
Have students work in groups to research a specific car they might like to drive. Have them
make a presentation to the class about the potential costs of owning and operating that
vehicle. Invite a bank loan officer, a finance specialist at a local car dealership, or an
insurance agent to review their presentations.
BETTER MONEY HABITS: HIGH SCHOOL
3
BETTER MONEY HABITS HIGH SCHOOL LESSON:
THE TRUE COST OF A CAR
Download the poster Better Money Habits: Financing a Car (www.bettermoneyhabits.com).
Have students prepare a summary of what they learned from each section: lender, down
payment, terms, interest rates, and depreciation.
BETTER MONEY HABITS: HIGH SCHOOL
4
BETTER MONEY HABITS HIGH SCHOOL LESSON:
THE TRUE COST OF A CAR
HANDOUT 9.1 – OWNING A CAR
PART A
1. List the different costs associated with buying a car that are identified in the video.
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
2. Which of these expenses are generally paid when the car is purchased?
3. Which of these expenses are considered to be periodic or ongoing expenses?
BETTER MONEY HABITS: HIGH SCHOOL
5
BETTER MONEY HABITS HIGH SCHOOL LESSON:
THE TRUE COST OF A CAR
PART B
Costs of Buying a Car
This handout provides a guide to estimating the costs of buying a car, truck, or other vehicle.
Expected costs should be calculated on a monthly basis when possible. Others may be an
annual cost. Use the sources provided to complete this handout and compare your results
with other groups in class. If using the “Other” section, identify the type of cost.
Type of Vehicle Researched______________________________________
TYPE OF COST
DOLLAR AMOUNT
MONTHLY,
ANNUALLY
Price/Monthly Payment
Interest on loan/monthly
Fees, Taxes upon
purchase
Gas/Month
Insurance/Month
Maintenance
Car Tag
Other
Other
Other
Tips for completing this handout: Use the invoice/listed price. Use an online interest calculator to
estimate monthly interest payment. To calculate gasoline costs: determine the number of miles you
average driving each month, divide by the estimated mileage for this vehicle; multiply that number by
the current cost of gasoline per gallon.
BETTER MONEY HABITS: HIGH SCHOOL
6