Finite Math Finance Project – 2011
Buying a Car
The Problem:
Your parents are giving you $1000 for graduation and you are going to buy a used car using this money as
its down payment. It must be a car which costs at least $10,000. The model you choose must be one that
has been in production for at least 5 years, but your car can be any age.
Your report must include all of the following:
Step 1:
Find and print an advertisement for the car you are choosing to buy. Circle the price and mileage.
Finding a Car
 Go to www.carmax.com or to any other ad website for used cars.
 Recall the car must be used, cost at least $10,000
 Your ad must include the features of the car including its mileage.
 Your car must be a 2008 model or older (do not choose a 2009 or 2010.)
 Print out a copy of this page
Step 2:
Calculate the amount of the loan by considering the sales tax and your down payment. Use the website
for Capital One to find the monthly payment for a 36 month and 60 month loan at current APR rates.
 Get a worksheet from me.
 Find the Amount of the loan:
a. Calculate the cost of the car with Lake County's 7% sales tax.
b. Calculate the loan amount
(Subtract the $1000 down payment from the car's cost with sales tax.)
 Go to the web site www.capitaloneautofinance.com
Select Used Auto Loans at the top of the page
Select Auto Loan Calculators on the right side of the page
For the 36 month loan:
Enter the loan amount
Enter the APR based on the rates for a 36 month used vehicle
Enter the 36 month loan term
Take a screen shot of the loan rates and the 36 month payment data
For the 60 month loan:
Enter the loan amount
Enter the APR based on the rates for a 60 month used vehicle
Enter the 60 month loan term
Take a screen shot of the loan rates and the 60 month payment data

On the worksheet, record the monthly payment for 36 and 60 month loan.
Also, calculate the interest you will pay for the 36 month and 60 month loans.
Document 4A
Be sure to show work.
Analysis:
Is it worth making payments for 5 years instead of 3 years for your car?
Be sure to consider the tradeoff between the amount of interest and the monthly payment.
Specific calculations should support your analysis including the differences between the monthly
payments and the amounts of interest for the 36 month and 60 month loans.
Summarize your findings with complete sentences.
Step 3:
Early Payoff
Assume that you chose the 36 month loan. Suppose that after a year's time of making payments you
inherit some money from a long lost relative and decide to pay off the balance of the loan. How much
interest will you save by doing this?

Show work using the TI calculator's finance program: TVM Solver.
Be sure to show values that you enter into the program as well as computations to find the savings.
Round to the nearest penny.
Step 4:
Increasing Your Monthly Payment
Assume that you chose the 60 month loan. After 1 year you decide to increase your monthly
payments by $200 per month. How much interest do you save by doing this?
 Show work using the TI calculator's finance program: TVM Solver.
Be sure to show values that you enter into the program as well as computations to find the savings.
Round to the nearest penny.
Document 4A