Part II
You are going to buy a car that will need to be financed. You will need to look at different options and decide which will be the best choice for your situation. You will need to find a car on the internet that you want to purchase.
•Find an advertisement for a car that you would like to purchase.
•You can look at any internet site, but you might consider: http://www.edmunds.com to learn how the advertised prices compare with market prices generally for cars of the same make, model and year.
•Once you have found the automobile you want to purchase and determined how much you will be spending on the car, you need to calculate the monthly payments. Use the amortization calculator at http://www.bretwhissel.net/cgi-bin/amortize to calculate the monthly payments.
•Calculate the monthly payment for your car for each option given below and complete the table.
Loan |Interest Rate|Length in Years
1———5%——————–5
2——–7.5%—————–3
3——–9.99%————–4.5
4——–11.5%————–2.5
5——–18%——————4
So first I went to edmunds and found the car i wanted which cost $36, 050
then i went to her amortization calculator link, to find the monthly payments for my car using her information from the chart she provided. the calculator gave me the following which i added to the chart to complete it.
Monthly Payment | Amortization Interest
$ 1,359.22——————–$ 416.68
$ 2,220.12——————–$ 625.01
$ 1,779.69——————–$ 832.51
$ 2,818.26——————–$ 958.34
$ 2,426.94——————–$ 1,500.01
then it asks:
1. Make a decision as to which Loan # is the best option. Explain your reasoning.
2. Think about what situations would make you decide NOT to take the Loan with the following criteria:
•Lowest interest rate
•Smallest monthly payment
•Shortest time
and this is EXACTLY what she asked and how i came about my previous question.
please help i am SO frustrated and confused.
The part you entered IS WRONG !
Use a different loan Calculator. Leave out the "amortization interest" figures above.
That link is taking you to a 30 year loan. Which confuses you and then YOU put the wrong figures down which confuses us.
Use this. But you have to know change the inputs with each calculation.
http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx
The point they are trying to teach you is that the lowest payment isn’t always the best deal, nor is the lowest rate or the shortest loan. All the things have to be combined and considered.
You are effectively trading a payment for $35,000 NOW.
The teacher wants you to justify your decision.
It takes some THINKING on your part. Inputting wrong figures shows you arent thinking.
The point is the 2.5 year loan is NOT a better deal than the 5 year loan because the rate is higher as well as the payment and total you pay.
Its pretty simple really. If you do it right and if you THINK.
The calulator is only as good as the imputs YOU put in.
sorry if this is one of those internet car loan things, most of these are scams they try to confuse you and then turn around and want excessive fees to do nothing, and then can blame you for not meeting their criteria how you tell is they try to dig money out of your pocket, before they do anything, this is not how banks and savings and loans or finance companies operate forget this, look around where you live, you will get a better deal, and not get ripped off by some company on the internet no one ever heard off
References :
Somewhere along the line you must have transposed some numbers or something. A $36,050 loan at 5% for 5 years comes in at about $690 a month, not the nearly $1400 you have. Any way, the shortest term with the lowest interest is usually the most prudent choice when it comes to financing something that is going to depreciate the most over the first three years of ownership. By going with a shorter term and lower interest you pay the loan off sooner and should you decide three or four years down the road you want to trade this vehicle for something else the amount you still owe on the financing will be less than the trade in value of the vehicle. If you go for a longer term with higher interest and decide to trade you could end up in a situation they call "upside down" meaning you still owe more money on the vehicle than it is worth as a trade in. In this case the amount you still own would be rolled over into the financing of the new purchase making the new payments higher than they need to be. The best is to pay it off sooner and get out from under car payments.
References :
The part you entered IS WRONG !
Use a different loan Calculator. Leave out the "amortization interest" figures above.
That link is taking you to a 30 year loan. Which confuses you and then YOU put the wrong figures down which confuses us.
Use this. But you have to know change the inputs with each calculation.
http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx
The point they are trying to teach you is that the lowest payment isn’t always the best deal, nor is the lowest rate or the shortest loan. All the things have to be combined and considered.
You are effectively trading a payment for $35,000 NOW.
The teacher wants you to justify your decision.
It takes some THINKING on your part. Inputting wrong figures shows you arent thinking.
The point is the 2.5 year loan is NOT a better deal than the 5 year loan because the rate is higher as well as the payment and total you pay.
Its pretty simple really. If you do it right and if you THINK.
The calulator is only as good as the imputs YOU put in.
References :