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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 Lesson 4: Fuel Costs & Fuel Economy

Lesson 5: Maintenance, Repairs, & Vehicle Depreciation Lesson 6: Buying a Used Vehicle Lesson 7: Vehicle Insurance

Honda Civic

2018 Canada Top Seller

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

Price (MSRP)

_____The cost that a dealership must pay to transport

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.

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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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11. Claire Cruise purchases the sports coupe. The base price is $14 765.

The optional equipment package costs $1 730, plus a ten-speed automatic

transmission costing $1265. She adds on lane departure, collision avoidance,

and park assist system for $3000. And a tech package, including wireless

phone charging and Bluetooth technology costing $2500. In addition, there is

an air-conditioning excise tax of $100 and a freight charge of $850.

a) Find the Manufacturer’s Suggested Retail Price for the following coupe.

b) She receives a trade-in allowance of $3 500 for her old car. She 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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Assignment 2: Financing a New Vehicle

1. Carly is looking to buy a Honda Pilot that sells for $43 090 plus taxes. A down

payment of $3000 is required. The Honda dealership is offering a loan rate of 6.75%

over 4 years. Determine:

a) the total cost

b) the amount of loan required

c) the monthly payment

d) the total amount paid for the vehicle by the end of 4 years

2. Rob is enjoying the spring weather and feels that he needs to buy a Mustang

Convertible that sells for $30 249 plus taxes. A down payment of $2050 is required.

The bank offers Rob a 3 year loan at 5% interest. Determine:

a) the total cost

b) the amount of loan required

c) the monthly payment

d) the total amount paid for the vehicle by the end of 3 years

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3. Jean is financing the purchase of a new vehicle. She has saved money for the down

payment. The table below shows the details of the purchase.

a) Calculate the total amount borrowed.

b) Calculate the total monthly payments paid over the term of the loan.

c) Calculate the finance charge (interest).

4. Saar wants to buy a new car for $23 500 after taxes. He gets a 4-year loan at an

annual interest rate of 6.75%.

a) Calculate the amount of interest paid for the first month.

b) Saar’s monthly car payment is $560.01. Calculate the amount of interest paid

over the life of the loan.

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5. Max Trucker (from Assignment 1, Question 10) is able to make a down payment

of $3500 on the four-wheel-drive vehicle. In order to finance the remaining

portion, he takes out a 4-year car loan at a fixed interest rate of 5.5%.

a) Determine the amount he must borrow through financing.

b) Calculate his monthly payment for the vehicle.

c) Calculate his deferred payment for the vehicle.

d) Calculate his finance charge for the vehicle.

6. Explain the difference between purchasing a vehicle outright and purchasing a

vehicle through financing.

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Assignment 3: Leasing a New Vehicle

1. Carly is looking to lease a 2012 Honda Pilot that sells for $43 090 and leases

for $440 plus taxes per month for a lease term of 48 months. A down payment

of $3 000 is required.

Determine: a) the total monthly payment

b) the total amount paid at the end of the lease

c) the residual value of the vehicle (residual value rate = 80%)

d) the total amount paid for this vehicle if it is purchase at lease end

2. Rob is enjoying the spring weather and feels that he needs to lease a 2008

Mustang Convertible that sells for $30, 249 and leases for $450 plus taxes

per month for a lease term of 36 months. No down payment is required.

Determine:

a) the total monthly payment

b) the total amount paid at the end of the lease

c) the residual value of the vehicle (residual value rate = 55%)

d) the total amount paid for this vehicle if it is purchase at lease end.

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3. Consider the following options. You can purchase the car now or lease the car

for 3 years and then purchase it. Consider a new car with a purchase price of

$18 500 plus taxes. GST is 5% and PST is 8%.

Option 1: Purchase. There is a down payment of $8000. The monthly

payments are $369.03 over 3 years.

a) What is the total cost of the car, including taxes?

b) What is the total amount to be borrowed?

c) What is the monthly payment?

d) What is the total amount paid for the car, including the down payment?

Option 2: Lease and Purchase. There is no down payment. The lease payment

is $325 per month, plus GST and PST. After 3 years, you purchase the car for

$7500, plus GST and PST. Determine the following.

a) What is the monthly lease payment, including taxes?

b) What is the total of the lease payments over the 3-year period?

c) What is the total amount paid for the car after the purchase?

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4. A new car with a purchase price of $46 500 can be either purchased outright

or leased and then purchased. There is GST and PST. Consider the following

options.

Option 1: Purchase. There is a down payment of $12 000. The car is

purchased and paid for monthly for 4 years. The monthly payment is $791.21.

Determine the following.


b) What is the total amount to be borrowed?

c) What is the monthly payment on the loan?


Option 2: Lease and Purchase. There is a down payment of $8000. The lease

payment is $450 per month, plus GST and PST. After 4 years, the car is

purchased for $18 500, plus GST. Determine the following.



c) What is the total amount paid for the car after purchase, including the

down payment?

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5. A new car with a purchase price of $22 600 can be either purchased outright

or leased and then purchased. There is GST and PST. Consider the following

options.

Option 1: Purchase. There is a down payment of $10 000. The car is

purchased and has a monthly payment of $690 for 2 years. Determine the

following.


b) What is the total amount of the car to be financed?

c) What is the monthly payment on the loan?


Option 2: Lease and Purchase. There is a down payment of $5000. The

lease payment is $350 per month, plus taxes. After 2 years, the car is

purchased for $12 400, plus taxes. Determine the following.



c) What is the total amount paid for the car after purchase, including the

down payment?

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Assignment 4: Fuel Costs & Fuel Economy

1. Complete the following chart.

Litres Cost/Litre Total Cost

a) 90 $1.05

b) 18 $1.20

c) 51.3 95 cents

d) 58.2 $65.06

e) 82.7 $79.10

f) $1.08 $45.60

g) $1.13 $53.80

h) 98 cents $49.21

2. Distance Driven **The odometer on your car shows how far you have travelled.

Distance Travelled = Final Distance – Initial Distance

a) Initial = 039287.6 Final = 040324.3

distance travelled =

b) Initial = 076543.2 Final = 076956.7

distance travelled =

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3. A car requires 52 liters of gasoline. If the cost of gasoline is $1.20 per liter,

calculate the cost to fill the tank.

4. A bill for gasoline was $21.50. If the cost of gas is $1.41 / liter, determine the

number of liters purchased.

5. A car consumed 70 liters of gasoline which cost $89.25. Calculate the cost per

liter.

6. Jannie takes her sedan for a drive through the city. At the beginning of her trip,

the odometer reads 114 570; at the end of her trip, the odometer reads 114 637.

a) How far did Jannie drive?

b) If Jannie used 16.3 L of gasoline, what is the fuel economy rate of her

vehicle?

c) Would the highway fuel economy rate be higher or lower than the rate

you found in part (b)? Explain.

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7. Brigette travelled in her minivan to Churchill to watch the polar bears and kept

track of her gas purchases. For each part of the trip, she would like to know:

(i) km driven, (ii) cost of each fill-up and (iii) fuel economy in L/100km.

She left with a full tank of gas and an odometer reading of 51 372.0

Final

Reading

KM driven

since last

fill

liters

Cost / Liter

Cost of fill

up

Fuel

Economy in

L / 100 km

51 570

198 km

27.2

$1.12

$30.46

13.7

L/100km

51727

27.2

$1.13

51 947

41.8

$1.08

Example work (how to fill in the chart):

i) Km Driven = 51 570 – 51 372 = 198 km ii) Cost of fill up = 27.2 x 1.12 = $30.46

iii) Fuel Economy (L/100km) = 27.2 x 100 = 13.7 L/100km 198

8. Using the info from the chart in Ques # 7, answer the following questions:

a) What was the total quantity of gas purchased?

b) What was the total cost?

c) What was the average fuel economy for the whole trip?

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Assignment 5: Maintenance, Repairs, and Vehicle Depreciation

1) Determine the resale value and total depreciation at a rate of 20% per year.

$56 870 Chrysler Aspen at the end of 3 years.

Resale value: Total Depreciation:


$40 000 Ford Explorer at the end of 2 years.



$26 500 Honda Civic Hybrid at the end of 3 years.


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4) Find the total cost of serving a vehicle (including taxes) that requires two

headlights at $28.50 each, an exhaust pipe at $130, and a muffler and a tail

pipe at $55.50. The time required for serving the vehicle is 1.6 hours. The rate

the service station charges for labour is $55 an hour.

5) Robert took his vehicle in for servicing at a Manitoba dealership. The dealership

charged $90 per hour for labour. The servicing took 1.5 hours to complete. Two

(2) windshield wipers were replaced at a cost of $12 each. Four (4) winter tires

were put on at a cost of $120 each. Calculate the total cost, including tax, of

the servicing.

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Assignment 6: Buying a Used Vehicle

Answer the following questions. SHOW ALL WORK!!

1) Russ found a car that he would like to buy through a private sale. The price of

the car is $1985. A friend examined the car and recommended that Russ install

a new battery for $129 and get a tune-up for a cost of $85. The safety check

will cost $40. The book value for this car is $2200.

Calculate the total cost of the car, after taxes.

Selling Price of Vehicle (paid to seller) =

PST use GREATER OF Book Value OR Selling Price (paid to MPI) =

Diagnostic Test and Repairs (paid to mechanic) =

Safety Check (paid to mechanic) =

Lien Search (paid to MPI) =

Total (add #1-5) =

2) Kaleigh goes to a dealer to buy a used car. The price for the car is $12, 430.


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3) Emily found a car in the Auto Trader that she wanted to buy for $8595. A

diagnostic check was done for $35 and a lien search for $3. A safety check

was done for $40. The book value of the car was $8000.


4) Jared has a choice of two cars.

a) One is a private sale for $4465. A diagnostic check would need to be done

for $35 and a lien search for $3. He will have to buy two new tires for

$275 each. A safety check will need to be done which costs $40 plus GST.

The book value of this car is $5000.


b) The other car can be bought through a used car dealer on sale for $4900,

before taxes. No additional costs or repairs necessary.


c) State which is the better buy for Jared.

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5) Phillip buys a used car privately for $1500. The price of a safety inspection on

the car was $40. The seller provided a lien search. When registering the car,

Phillip is told that the book value of the car is $3700.

Calculate the total cost of purchasing the car, after taxes.

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Assignment 7: Vehicle Insurance

1. If you are in an accident, who is responsible for any damages or injuries?

Explain.

2. Tammy drives her car 20 kilometres to work each day. State the type of

insurance policy Tammy will need for proper coverage.

3. When purchasing car insurance, a deductible is: (circle one)

a) the amount you pay every year for the insurance.

b) a one-time lump sum you pay the insurance company when you first buy the

car.

c) the amount of the insurance claim you must pay when at fault for an accident.

d) the amount you pay for extra coverage against damage to another person or

their property.

4. State and explain two (2) factors that may increase a car insurance premium in

Manitoba.

Factors Explanations

5. How do your driving merits affect your insurance premiums?

6. What payment options are there for making your vehicle insurance premiums

through Autopac? Which option is most expensive and why? (p. 75-77)

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