Which_is_the_Best_Deal_2.6.2.A3.pdf

Which_is_the_Best_Deal_2.6.2.A3.pdf - Page | 18 2.6.2.A3...

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Unformatted text preview: Page | 18 2.6.2.A3 Which is the Best Deal? Total Points Earned 15 Total Points Possible Name Date Percentage Class Jake Clifford 5/17/17 3rd Scenario: Cesar has started his first job with a monthly net income of $2,740. He currently has an education loan for $230 per month. Cesar wants to purchase a reliable vehicle to get to and from work. His dream vehicle is a new truck. After talking to the automobile dealership and conducting extensive research, he has selected one that costs $25,000 after his $3,000 down payment. He has shopped around for a loan and has three options. Directions: Review the information below to help Cesar choose an automobile loan by answering the following questions. Option 1 Option 2 Option 3 Lender Car Dealership Local Credit Union Online Auto Loans Annual Interest 4.2% 1.79% 4.64% Rate Number of Months 48 60 72 Monthly Payment $566.72 $435.90 $398.46 Fees $0 $30 application fee $45 application fee $2,500 cash back Must have an account APR increases to 11.36% for Incentives and Requirements provided to borrower with the credit union a missed payment Total Amount Paid $27,202.56 total payment $26,154.00 total + $30 $28,691.28 total + $45 less $2,500 = $24,702.56 application fee = $26,184 application fee = $28,736.28 Total Cost ‐$297.44 $1,184.00 $3,736.28 (because of the cash back) 1. What is an advantage and disadvantage of each loan option? (6 points) Option 1 Option 2 Advantage 48 Months Disadvantage 4.2% Interest Option 3 1.79% Interest $398.46 a month Must have an account with the credit union $45 Application Fee © Take Charge Today – August 2013 – Credit Basics Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Page | 19 2.6.2.A3 2. Which loan option would you recommend for Cesar? Provide three reasons to explain your recommendation. (4 points) Option 1 because it has the smallest amount of months due so he can pay it off quicker and be done with it, it also has cash back, and $0 fees. 3. Do you feel this truck is affordable for Cesar or should he consider other alternatives? Provide at least two reasons supporting your answer. (3 points) Yes i think it is because he can still buy a car and have plenty of extra money, and he can pay for his education. 4. How can you use a credit analysis process like this in your own life? (2 points) You can use this to help pay for items that you cant afford or would other wise be to expense to pay all at once. © Take Charge Today – August 2013 – Credit Basics Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona ...
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  • Fall '13
  • Bollen
  • Fee, Cesar

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