Unit 3: Vehicle Finance Assignments

Unit 3: Vehicle Finance Assignments

Lesson 1: Buying a New Vehicle (Purchase Price, Taxes, and Trade-Ins)

Lesson 2: Financing a New Vehicle (Car loans)

Lesson 3: Leasing a New Vehicle

Honda Civic 2018 Canada Top Seller

Lesson 4: Fuel Costs & Fuel Economy

Lesson 5: Maintenance, Repairs, & Vehicle Depreciation

Lesson 6: Buying a Used Vehicle

Lesson 7: Vehicle Insurance

BMW i3 2018 Electric Car

Ford F-150 2018 Canada Top Selling Pickup

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Assignment 1: Purchase Price, Taxes, and Trade-Ins

Clearly circle the most correct multiple choice response to the following four questions:

1. The first step in purchasing a new vehicle is: a) Asking your parents for money b) Establishing why you need the vehicle and the important features c) Looking for a dealership d) Buying all the latest car magazines e) All of the above

2. There are many reasons for buying a vehicle. Which of the following is NOT a reasonable reason for buying a vehicle? a) Convenience b) Commuting to work or school c) Because everyone else is buying one d) Replacing your older vehicle e) Independence (not relying on others for a ride)

3. When deciding how you are going to use the vehicle, the following are good questions to consider: a) Will I have to share this vehicle with my parents? b) Will I be driving all my friends to school every day? c) Will my bike fit in the back or on the roof? d) Will I be driving on our annual road trips or just to work and back? e) All of the above

4. What calculation can you do in order to determine how much you can afford to spend on a vehicle? a) MDSR b) LDSR c) GDSR d) TDSR

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5. Write the letter associated with the term that matches each definition.

TERMS

DEFINITIONS

A. trade-in

allowance

_____It is the selling price that the manufacturer

recommends to the retailer (also known as the sticker

price).

B. Manufacturer's

Suggested Retail _____The cost that a dealership must pay to transport

Price (MSRP)

the vehicle from the manufacturing facility to the car

dealership.

C. base price

_____It is a $100 payment required for vehicles with this

option that are purchased in Canada or imported from the

United States.

D. optional

equipment

_____If you decide to exchange your older vehicle for a

newer one, the dealer will decide the value and reduce

your purchase price by this amount.

E. air-conditioning

excise tax

_____It is the suggested price of the vehicle without any

additional features

F. freight charge

_____This may include any of the options listed on the

Vehicle Features Chart.

6. Anders is trying to decide whether he can afford a new car. The car he wishes to purchase will cost him $109 biweekly. He is currently pays $850 a month for rent and utilities. Anders currently pays off his credit card debt with monthly payments of $90. His gross monthly income is $3700.

a) Calculate his TDSR if he decides to buy the car.

b) Justify if Anders can afford to buy this car, using your calculation from part a. Page 3 of 22

7. Write the letter (of the corresponding label) that appropriately matches each recommendation in the table below.

A) Before You Buy B) Saving Money C) Before Driving Your New Vehicle Home LETTER RECOMMENDATIONS FOR BUYERS

Check the sticker price of the vehicle.

Choose a smaller vehicle. Dealerships usually have lower prices for small vehicles for various reasons.

Check that your financing is in order.

Check your vehicle for dents or scratches. Make sure your vehicle is spotless! If you have purchased a new vehicle, there should be no wear and tear on it.

Look for reduced prices at the end of the year. Dealerships need to make room for the next year's models. Therefore, last year's models will be priced to sell quickly.

Test drive the vehicle.

Read the warranty agreement of the vehicle. Warranty agreements of most vehicles are available online.

Avoid buying brand new vehicles as soon as they arrive at the dealer. New vehicles are in high demand and thus have a higher price. If you wait a few months, the price will usually go down.

Read the contract before you sign it.

Match the serial number on your contract with the serial number on your vehicle. You don't want to be driving away with the wrong vehicle!

Negotiate for options. Some dealerships may be more willing to provide free options for your car, such as air conditioning, rather than a lower sale price.

Look for rebates and incentives. These can come from manufacturers or even the government.

Obtain written quotes of the vehicle.

Read the owner's manual of the vehicle.

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8. Prima buys a new two door Neon Sport Coupe with a base price of $17 218. She pays $2490 in an option package plus a stereo system for $665. There is a freight charge $850 and an air conditioning federal excise tax $100. Determine how much will she pay for this car, after sales taxes.

9. Anthony decides to buy a new Honda Accord. He pays the base price of $24 673 and chooses an option package for $2 614. He adds an automatic transmission for an extra $695. There is a freight charge $850 and there is an excise tax for air conditioning $100. Anthony receives a trade-in allowance of $4 500 for his old car. Determine how much will he pay for this car, after sales taxes.

10. Max Trucker purchases a four-wheel-drive vehicle from Deal-a-Car Dealership for $40 285. He receives a trade-in allowance of $8500 for his old car. He pays an additional documentation fee of $129 and a tire tax of $14. Calculate the total purchase price of her new vehicle, after sales taxes.

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