Scribd
Upload
120 views3 pages

Calculating A Car Loan - Economics

This document provides instructions for calculating the costs of purchasing a car through financing. It outlines 8 steps: 1) Selecting a car and loan option by visiting car dealerships and banks. 2) Calculating the loan amount by subtracting the down payment from the total car price. 3) Determining the loan term in months, usually 3-6 years. 4) Dividing the loan amount by the number of months to get the monthly payment. 5) Adding the interest rate set by the lender to the monthly payment. 6) Multiplying the monthly payment by the number of months to calculate the total paid for the car. The document notes additional costs of insurance, maintenance, gas and taxes

Uploaded by

Maria Fabian
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
120 views3 pages

Calculating A Car Loan - Economics

This document provides instructions for calculating the costs of purchasing a car through financing. It outlines 8 steps: 1) Selecting a car and loan option by visiting car dealerships and banks. 2) Calculating the loan amount by subtracting the down payment from the total car price. 3) Determining the loan term in months, usually 3-6 years. 4) Dividing the loan amount by the number of months to get the monthly payment. 5) Adding the interest rate set by the lender to the monthly payment. 6) Multiplying the monthly payment by the number of months to calculate the total paid for the car. The document notes additional costs of insurance, maintenance, gas and taxes

Uploaded by

Maria Fabian
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Calculating a Car Loan - Economics

Objective: To be able to calculate the total amount needed to purchase a car through a financial institution. To
understand how the total cost of a car rises when you don’t buy with cash or when you finance too much of the
cost.

Instructions:
1. Make a copy of this document and add your group number the file [Ex: Copy of Car Loan activity Group 2]
2. Change the SHARE option from private to *Anyone with link can Edit* and share the link within your group
3. Read the prompts in the colored boxes and reply in the white boxes
4. When you finish change back to View only and send me the link with the completed work through the chat

I. Select a Car and a Loan Option

Names:

Step 1: Go to BanReservas,
BancoPopular, Scotiabank, or
another bank of your chosing to see
the interest rate options available (I
will assign different buying options)

Step 2: Go to Super Carros to find


the price of your car (put the model,
year and price)

Step 3: Calculate your down payment


amount (INICIAL)

To do this you MULTIPLY the total price


of the car by the percentage asked.

**Example: Car costs US$20,000


[RD$1,170,000] and you will do a 20%
downpayment; 20,000 x 0.20 = $4,000
(or RD$234,000)**

II. Calculate Loan amount and Term

STEP 4: Calculate the loan amount


to be borrowed from the bank.

**Example: Loan amount = Price of car -


downpayment |20,000 – 4,000 =
$16,000 loan or RD$936,000 – 234,000
= $702,000**

STEP 5: Determine the “term” of the


loan, or the number of months you
will take to pay it back.

Created by Ms.Gabriela Martínez for Dominico Americano School | All rights Reserved 2020
Usually between 3 – 6 years, or 36 – 72
months. This is another thing you select
based on your preference and ability to
pay. Remember the longer you take, the
more interests you end up paying.

III. Calculate Loan Payments

STEP 6: Determine the monthly


payments.

First you need to calculate the amounts


in Dominican Pesos [multiply loan
amount by 58.50].

DIVIDE the loan amount (step 4)


between the number of months of the
loan (step 5).

**Example: US$ 16,000 x 58.50 = RD


$936,000

| 936,000 / 60 months = RD$15,600**

STEP 7: Add the interest rate offered


by the bank, you do NOT get to
choose this, this is established by the
lender.

To add the interest amount you


MULTIPLY the monthly payment amount
by the interest rate.

**Example 15,600 x 9% = 1,404 |Then


1,404 + 15,600 = RD$17,004

**You can also multiply the payment


amount by 1+(rate) and get the same
result|Example: 15,600 x 1.09 = $17,004*

STEP 8: Calculate total amount paid


for the car at the END of the loan.

To do this you MULTIPLY the monthly


payment (step 7) times the loan term
(step 5) and ADD the down payment
(step 3)

**Example: 17,004 x 60 = 1,020,240 +


234,000 = 1,254,240**

Created by Ms.Gabriela Martínez for Dominico Americano School | All rights Reserved 2020
DISCLAIMER: For the purpose of this exercise we won’t calculate the car insurance costs, but
insurance is usually between $3,000 – $8,000 (could be more for sports cars) added to the
monthly payments for the duration of the loan. The more expensive the car, the more
expensive the insurance.

Remember you have to add Insurance, Maintenance, Gasoline, Taxes (marbete, multas), Car
washes to your yearly cost of having a car!

Created by Ms.Gabriela Martínez for Dominico Americano School | All rights Reserved 2020

You might also like