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1. Introduction to Car Loans

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Transcript

Welcome Back!

In this activity, you will learn about financing a car.

You will use a spreadsheet to calculate loan costs and help you make decisions about affordable loans.

You will calculate the total monthly payment and the total interest for a series of loan amounts using PMT and absolute value functions and absolute and relative cell references.

You will also research cars and use an image function to insert pictures of the cars in your spreadsheet.

Say you are in the market for a new or used car.

You find a car you love, but you can’t afford to buy it out of pocket.

Few people can!

One option is to get a loan for the money, or to finance the car.

Financing means that you borrow money from a lender and pay them back little by little.

But most lenders don’t do this for free.

Not only do you pay back the principal, or the amount of money you borrowed; you also pay an additional percentage of that principal to the lender for using their money.

This additional percentage is called interest. There are three factors that determine how much you’ll pay each month for a loan: The amount of money you borrow; The interest rate, also called the annual percentage rate, or APR; and the term of the loan, or the time it takes you to pay it off.

Your monthly payment varies depending on how you adjust these factors.

Sometimes having a lower monthly payment means that you pay more overall!

If this sounds overwhelming, don’t worry.

Financing a car is not always a straightforward process, and there are many options to consider.

In this activity, you will create a spreadsheet to help you determine how much money you could afford to borrow when buying a new or used car.

On the spreadsheet, you will select an interest rate, or APR...

And a loan term….

And convert these to monthly amounts.

You will also specify a price range for the car you will research.

Once you have this basic information, you will calculate and record: A table of possible loan amounts; your monthly payment; total payments, or the total amount you will spend on the car; and the amount of money you will spend on interest.

Once you set up your spreadsheet, you will research new or used cars to get an idea of what they cost per month, as well as the total amount you will pay over the term of the loan.

To begin, go to sheets.google.com/create to start a blank spreadsheet.

Name it “Loan Amount Chart.”

Then, move on to the next video to start calculating costs.

Now, it’s your turn: Go to sheets.google.com/create to start a blank spreadsheet.

Name it “Loan Amount Chart.”

Then, move on to the next video.

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Instructions
  1. Go to drive.google.com/
  2. Open a new, blank spreadsheet.
  3. Name the spreadsheet "Loan Amount Chart."
Attributions
  • "Street Level New Car Showroom from Side Entrance" by Mercedes-Benz of Encino (https://www.flickr.com/photos/mercedesbenzencino/8345921093) -- Licensed by CC BY 2.0 (https://creativecommons.org/licenses/by/2.0/) -- Image scaled up, cropping edges
  • "Easy Credit - Bleecker Automotive Group" by Bleecker Bird TV (https://www.youtube.com/watch?v=vGVq2yK-v24&list=PLO686bIovT9Oi7FlDdd8npFbHWETUEGCe&index=2) -- Licensed by CC Attribution 3.0 Unported (https://creativecommons.org/licenses/by/3.0/legalcode) -- Audio is removed from video, Clipped to fit video length needs