Introduce topic by saying:
Are you prepared to make a deal on a car? The more you know, the better chance you have at buying the car you want for the price you want at a car dealership. This is why it’s so important to understand how automobile loans work. On top of that, learning to negotiate well can be a huge asset.
Demonstrate to students that regardless of how the vehicle is purchased, it is important to realize that the price tag on the vehicle isn’t actually the cost of the vehicle. So, the first step to buying a car is to determine the actual cost of the car.
The asking price is the price tag on the vehicle. This can sometimes be negotiated down to a smaller amount. Once the asking price has been agreed upon, you need to calculate the taxes and tags you will owe for the car. Then account for any trade-in discounts or dealer fees that will be added to or subtracted from the price of the car.
Finally, if you are leasing or taking out a loan, you need to subtract any down payment amount you will be giving over in cash. The remaining balance is the amount you will have to finance in order to get the car.
Instead of “giving notes” about the three different ways to purchase a car, show them the differences by creating a simulation exercise. First, each student needs to find their dream car using an online platform that lists actual vehicles for sale with posted prices. Once each student has found their dream vehicle, then have students find the value of their current car. If they have a car, they can look up the value using Kelley Blue Book. If the student doesn’t own a vehicle, then the value of their current car would be $0.00.
You need to use a table or an Excel spreadsheet to project every student’s name under each purchasing option. At the end of each demonstration, you will need to log the applicable amounts for each student so they can visually see the differences at the grand conclusion of this topic. The display will look like the attached Teacher Aid.
Have students discuss these questions with their classmates or with a partner.
If you think of car commercials on TV, internet, or print, what are some of the special offers advertised?
What advice have you heard or been given about buying cars?
Have students watch the video: How to Haggle for a Used Car. Lead a discussion with students using the following questions:
Why is it important to plan first, and then haggle when negotiating to buy a car?
What strategies were most effective during the process and why?
What steps could you take to help prepare yourself to buy a car?
Closure: (REFLECTION ENTRY): Explain the differences between a cash purchase, auto loan, and leasing a vehicle. If you bought your own car, explain what path you took and if you think you drove down the right path. If you haven’t purchased your own vehicle, describe what steps you are going to take to make smart financial decisions and drive down the right path.