This is a graded discussion: 10 points possible

due Jul 25

Discussion 3: How to Wisely Buy a Car

2020 unread replies.2020 replies.

You've seen ads for cars on tv, social media, and on streaming services. But how can you know you have the best deal for your situation?

There are some things we can control and others we cannot. For this week, we have looked at several factors that go into the purchase of cars such as interest rates, down payments, life of loans, and how often interest is compounded.

But computing rates can be cumbersome...unless you have good software!

Let's say you are purchasing a car for $21,363 and you want a good deal even if you cannot pay the entire amount all at one time.

Click the link to Desmos: https://www.desmos.com/calculator (Links to an external site.) and type in the PMT formula like the picture below. After entering the formula, you can add a slider to all variables.

Remember: i = r m

Move the sliders for each variable and note what happens to your payment amount. Sometimes, the payment goes up. Sometimes, the payment goes down.

The slider values can be changed: Double click on a slider variable. You know rates can never be lower than 0 and never higher than 1. So change the r-value accordingly. The m-value is usually 12. But you can build a slider to slide back to quarterly or semiannually too.

Here is a screen grab for a set up. Note that the P is the PMT and the d is a down payment. Looks like this person can expect to pay $966.18 per month with $1200 down and 4.6% compounded quarterly for 6 years. Also note, there is a 2nd formula for total paid amount (T). Looks like this person will pay $24,388.32 after all principle and interest is paid in full. (Scroll down for the assignment.)

(10 points + 2 points extra for being the first to find the LOWEST T-value): Find the least expensive overall cost T. Post only these values in the following way (or as a screen grab):

d=

m=

r=

t=

P=

T=

Parameters: No more than 12 payments per year. Don't finance beyond 7 years . The most you can bring as a down payment is $2000. Interest rate must be above 3%. Your monthly payment must be $600 or less.