‘What If’ simulation software
11 IPT
Can You Afford A New Car?
http://www-rohan.sdsu.edu/~sadornas/hsadornas/wip.html
Heidi Sadornas
Shannon Stevens
Dana Rose
Find your dream car and
put a picture here
Click on the image to see your dream car!
Questions
The questions students might end up asking may differ slightly from those listed below. This allows
the student to have a more successful learning experience from the inquiry activity.
1. How do the interest rate and the length of the loan affect the net price of a car?
2. Which auto loan rate and time will have the lowest monthly payment?
3. Which one ends up with the highest/lowest net price?
4. Based on these findings, what would be the most beneficial way for you to purchase a car and why?
Procedures
After students have asked questions related to the topic, they will need to decide a number of things,
which include:
 Type(s) of data needed to answer the questions
 Defining important terms
 Choosing tools for data manipulation
 Defining how data will be manipulated and presented
Types of Data needed:
 Prices of a new car
 Interest Rates (APR) and corresponding loan lengths
 Monthly payments
 Net Price of the car
Important Terms:
1. Interest Rate/APR - A percentage of the price of the car, that is applied yearly to the principle
loan amount (Annual Percentage Rate)
2. Net Price - The total price of the car, including the amount paid in interest.
Investigative Tools:
1. Students will be using numerical data.
2. Online payment calculators and Excel spreadsheets may be used to create histograms.
Manipulation Tools:
1. Students will use any online monthly payment calculator to find the payments for their vehicle
and loan.
Analysing Software Activity
1
Boughton 06
‘What If’ simulation software
11 IPT
2. Students will use Excel to calculate the net price of their vehicle.
3. Students should make histograms comparing the net prices of the car.
4. The students will use this to determine which loan provides the lowest net price.
5. The students will also create histograms comparing the monthly payment of each loan.
Data Investigation
Listed below are links to loan agencies, loan calculators and car prices, all organized in a concept
map. You are welcome to look at other websites for your reference.
Use this link to open a new excel spreadsheet to organize your data.
Analysis
See Example Excel Spreadsheet
1. Find Car and its price
2. Find loan agencies with corresponding loan term and APR
3. Decide loan amount (Does your loan agency require a down payment?)
4. Use loan calculator to find monthly payments
5. Calculate net price using your Excel Spreadsheet
{View Excel Tutorial}
6. Calculate the amount of interest you will pay for each loan.
7. Use excel spreadsheet to create two (2 graphs):
8. Comparing each net price
See example
9. Comparing each monthly payment
See example
Findings
1. The higher the interest rate, the higher the Net Price.
2. The short term loans required a higher monthly payment and had a slightly lower APR. The long
term loans required a lower monthly payment and had a slightly higher APR.
3. Overall, the longer the loan term, the higher the Net Price.
4. Even though the short term loans usually guarantee a lower net price, the monthly payments are
much higher. This would be a better option for people who can afford a larger monthly payment. The
longer term loans tend to be a more practical choice for people with a tight monthly budget.
Analysing Software Activity
2
Boughton 06
‘What If’ simulation software
11 IPT
New Questions
During the investigation, some new questions came up:
1. Would you be better off buying a less expensive new car, or a used car? (weighing up different
options for loans - since used & new car loans differ)
2. How would leasing prices compare with purchasing prices?
3. When/why would leasing be more beneficial than purchasing?
4. Are there other loan agencies that may provide you with better/different loan options?
Analysing Software Activity
3
Boughton 06