Purchasing a Carby Neema Smith

Assignment:

• I’m 23 years old, and am setting out to buy my first car.

• I’ve been working for a 2 years and, using both simple interest and future value of simple interest methods, will explain the process of how to go about doing this.

• My credit score is 800, which is great.

Purchasing a Car

When Searching for a CarYou Should Know…

1. How Much You Should Be Spending

• Do the math yourself first

Figure out the numbers prior to searching/spending, so you can compare them to what the sellers are asking.

Purchasing a Car

2. The History of the Seller/Dealer

Purchasing a Car

• Look up the history of the seller of the car or the car dealership, to make sure they’re reputable.

You may find some complaints about their work ethic, quality or anything else.

Buying My Car

• I will be purchasing my car offline, using the Kelly blue book site.

I’ve researched Kelley blue book (www.kbb.com) and found that they have a long history, filled with several awards. I was referred to this site by my mother.

Purchasing a Car

My Choice Is…

2001 VOLKSWAGEN NEW BEETLE GLXPrice: $6,800

Mileage:

Engine: 4 Cyl

Transmission: Manual

Drive: 2WD

Fuel: Gasoline

MPG: City 21/Hwy 28

Exterior: Green

Interior: Tan

Purchasing a Car

•The buyers are asking $6,800 for the car.

•I plan to pay at an interest rate of 6.5%, over the span of 3 years.

•The monthly payment is calculated by using the future value of simple interest divided by the number of payments. 

Facts:

So…

The Amortization Table would look like this…

$6,455.91$172.51$35.90Dec 2010$6,282.47$173.44$34.97Jan 2011

BalancePrincipalInterestMonth

$4,678.58$182.08$26.33Oct 2011$4,860.67$181.10$27.31Sept 2011$5,041.77$180.13$28.29Aug 2011$5,221.90$179.16$29.26Jul 2011$5,401.05$178.19$30.22Jun 2011$5,579.25$177.23$31.18May 2011$5,756.48$176.28$32.14Apr 2011$5,932.76$175.33$33.09Mar 2011$6,108.08$174.38$34.03Feb 2011

$6,628.42$171.58$36.83Nov 2010A

mor

tiza

tion

Overview:

• Total of 36 payments made.

• Total interest paid: $702.88

• Pay-off date: Oct, 2013

• Monthly principal and interest: $208.41