Planning 10 ~ Alexander
Purchasing a Car
Choose any vehicle you want! This is dreamland, but in this world you still have to pay for it. Search through the internet and find a vehicle ~ choose one affordable car ($10,000) and one dream car (unlimited). You have a down payment of $2000 cash – the rest you must borrow. The rate of lending is set at 6%, to be repaid over 5 years. 1. Your task is to find a car (Used Victoria or TC or car lot), calculate the cost of borrowing and record the following cost in the table below: the cost of the vehicle (principal), the rate of interest, the total amount to be repaid, total interest paid, monthly cost and GST.
Daily Driver CAR PURCHASE Type of Car Model Year Seller Sticker Price FINANCING Down Payment Loan Amount Required Rate of Interest Monthly Payment Amount Total Interest Spent GST Total Cost of Borrowing + GST * PST is not calculated on a used car but GST is calculated. 6% $2000
Dream Car
$2000 6%
2. Consider the affordable car – was the cost of borrowing worth it over 5 years, or is you car now worn down and worth less (it took you 5 years to pay for it!). Explain your point of view in a short paragraph. The are 2 bank sites to use – TD is very simple ~ use the Loan Calculator – Links on the website. http://www.tdcanadatrust.com/lending/car.jsp The RBC site is more in-depth – check out the info on what to look for when purchasing. Choose Car Loan Calculator under Tools to figure out your car loan http://www.rbcroyalbank.com/buyingacar/ go to (Royal Buy-Back Loan vs. Ordinary Car Loan).
Planning 10 ~ Alexander
Purchasing a Home With a Mortgage
You are ready to buy a home in Victoria – you are looking at a Condo downtown that will cost you $350,000. It’s a great place, but since the market is hot, the price is high. You have saved 10% for a down payment and need to borrow the rest. 1. Define mortgage: ________________________________________________________________________________ amortization: _____________________________________________________________________________ Go to: http://www.canequity.com/mortgage-calculator/ 2. Calculate your loan over 5 years at 3.59% and 10 years 5.25% over an amortization period of 25 years. Choose weekly accelerated payments. In the data table below, show the calculation results for each question, just like the car loan. 5 year mortgage Down payment Interest Rate Amortization Weekly Mortgage Payment Total payment over amortization Total Interest over amortization 3. Look at the Comparison Chart of Monthly vs. Weekly Mortgage Payments on the calculation page on the website for the 5 year mortgage - compare how many weeks slower you will pay off the mortgage over 25 years if you choose Monthly vs. Weekly payments. Record your result on the table below. Payment Schedule Monthly payments (12 per year) Weekly payments (52 per year) Each Payment Total Interest Savings Loan Paid Off In 25 years 25 years 10 year mortgage
4. Compare the total amount paid in principal and interest between 5 year and 10 year loans. After seeing the numbers, do you think the interest charged on mortgages is fair? How important is it to pay down your mortgage as quickly as possible? __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________