and
3.1.5 Practice: Making a Smart Automobile Practice
Purchase
Personal Financial Literacy
Name:
Date:
For this assignment, complete the following steps:
1. Part 1: Review: Consider the steps that Eric took to finance his vehicle and
review the options he has available. Record answers to the questions below as
you work through the practice pages.
2. Part 2: Analyze: Decide which loan option is best for Eric. Answer questions
about why you came to this conclusion.
To get the best grade possible, follow the instructions in the assignment closely, and
answer all of the questions completely. This assignment is worth 40 points.
Part 1: Review
1. Write a list of at least three things that Eric has done right before applying for a
loan. (5 points)
~ he carefully looked at the loan application
~ he communicates the borrowing party regarding the closing of the loan
~ calculations were performed accurately
2. Identify at least three factors that may influence Eric's decision, including Eric's
savings and any ways he could reduce the total cost of the loan. (5 points)
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- He should choose a loan with the lowest return and the shortest loan term available. This is due to
the fact that the overall interest rate will be lower. He should also
Part 2: Analyze
3. Review the loan offers that have been provided to Eric. Consider his financial
situation and think about which loan is best for him. Then answer the following
questions. (30 points total)
a. Should Eric choose the loan that is the cheapest overall? Why or why not? (5
points)
No he should not because he stated before that he only wants to pay 500 per
month and anything more would probably affect his credit score.
b. What are the advantages and disadvantages of a shorter-term versus a longer-
term loan? (5 points)
Shorter loan terms typically mean higher monthly mortgage payments, but often
have lower interest rates. And if you pay off your mortgage balance within a
shorter term, you may pay less in interest overall than with a longer-term
mortgage.
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c. Which loan should Eric choose? Why? Explain your reasoning in a complete
paragraph, using at least three supporting details. (10 points)
Eric should choose the Dealership to get the loan. I say this because the dealership
loan is the shortest length of loan, which is only 3 years. The only thing with that is
Eric will have to pay a little than he waned for the monthly payment.
d. What should Eric do to be a responsible borrower? What should he do if he is
unable to make his loan payments? What are some downsides of late
payments? (5 points)
To be a responsible borrower Eric should pay his monthly payments on time. he
needs to communicate. If for some reason he is unable to make a timely payment, he
must call his lender so that the lender is informed of his current situation. Late
payments can have several downsides. They can damage Eric's credit score, which
can make it harder for him to borrow money in the future. Late payments can also
result in additional fees and interest charges, which can make the loan more
expensive overall. Finally, if Eric continues to miss payments, the lender may take
legal action to collect the debt, which can result in wage garnishment or other
consequences.
e. Does Eric have any other options besides the ones presented here? Try to think
of at least two other options. (5 points)
I have no idea.
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copying, reuse, or redistribution is prohibited.
Copyright © 2022 Apex Learning Inc. Use of this material is subject to Apex Learning's Terms of Use. Any unauthorized
copying, reuse, or redistribution is prohibited. Apex Learning ® and the Apex Learning Logo are registered trademarks of
Apex Learning Inc.
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