2. Assignment:
• I’m 23 years old, and am setting out to buy my
first car.
• I’ve been working for a 2 years and, using both
simple interest and future value of simple interest
methods, will explain the process of how to go
about doing this.
• My credit score is 800, which is great.
Purchasing a Car
4. 1. How Much You Should Be Spending
• Do the math yourself first
Figure out the numbers prior to
searching/spending, so you can compare them to
what the sellers are asking.
Purchasing a Car
5. 2. The History of the Seller/Dealer
Purchasing a Car
• Look up the history of the seller of the car or
the car dealership, to make sure they’re
reputable.
You may find some complaints about their
work ethic, quality or anything else.
6. Buying My Car
• I will be
purchasing my
car offline,
using the Kelly
blue book site.
I’ve researched Kelley
blue book (www.kbb
.com) and found that
they have a long
history, filled with
several awards. I was
referred to this site by
my mother.
Purchasing a Car
8. 2001 VOLKSWAGEN NEW BEETLE GLX
Price: $6,800
Mileage:
Engine: 4 Cyl
Transmission: Manual
Drive: 2WD
Fuel: Gasoline
MPG: City 21/Hwy 28
Exterior: Green
Interior: Tan
Purchasing a Car
9. •The buyers are asking $6,800 for the car.
•I plan to pay at an interest rate of 5.044%, over the
span of 3 years.
•This monthly payment is calculated by .
Facts:
So…
11. Month Interest Principal Balance
Nov 2010 $28.58 $175.35 $6,624.65
Dec 2010 $27.85 $176.09 $6,448.56
Jan 2011 $27.11 $176.83 $6,271.72
Feb 2011 $26.36 $177.57 $6,094.15
Mar 2011 $25.62 $178.32 $5,915.83
Apr 2011 $24.87 $179.07 $5,736.76
May 2011 $24.11 $179.82 $5,556.94
Jun 2011 $23.36 $180.58 $5,376.36
Jul 2011 $22.60 $181.34 $5,195.02
Aug 2011 $21.84 $182.10 $5,012.92
Sept 2011 $21.07 $182.87 $4,830.05
Oct 2011 $20.30 $183.63 $4,646.42
Amortization
12. Overview:
• Total of 36 payments made.
• Total paid: $7,341.71
• Total interest paid: $541.71
• Pay-off date: Oct, 2013
• Monthly principal and interest: $203.94
Standard Simple Interest
13. •The buyers are asking $6,800 for the car.
•I plan to pay at an interest rate of 5.044%, over the
span of 3 years.
•This monthly payment is calculated by
using the future value of simple interest
divided by the number of payments.
Facts:
So…
14. Month Interest Principal Balance
Nov 2010 $28.58 $175.35 $6,624.65
Dec 2010 $28.58 $175.35 $6,449.3
Jan 2011 $28.58 $175.35 $6,273.95
Feb 2011 $28.58 $175.35 $6,098.6
Mar 2011 $28.58 $175.35 $5,923.25
Apr 2011 $28.58 $175.35 $5,747.9
May 2011 $28.58 $175.35 $5,572.55
Jun 2011 $28.58 $175.35 $5,397.2
Jul 2011 $28.58 $175.35 $5,221.85
Aug 2011 $28.58 $175.35 $5046.5
Sept 2011 $28.58 $175.35 $4,871.15
Oct 2011 $28.58 $175.35 $4,695.8
Amortization
15. Overview:
• Total of 36 payments made.
Future Value Simple Interest
Differences:
-Total Balances= $49.38
-Total Interests= $49.29
-Total Principals= $49.37
