This lesson uses a Better Money Habits video to explain the basic decisions involved in buying a car.
This lesson uses the Better Money Habits: Comparing the Cost of New and Used Cars video to explain the basic decisions involved in buying a car. The lesson compares the costs associated with a new car to the costs associated with a used car, including the price, financing, mileage, insurance, and maintenance. The purpose of this lesson is to help students understand the decision to buy a car includes more than the price of the vehicle or the monthly payments. The length of the video is about 7 minutes, and the estimated time for this lesson is one 45 minute class period.
This lesson can be used to teach students about the decision-making process and correlates with other lessons in Financial Fitness for Life, Grades 6-8, focused on comparative shopping or decision-making. It is designed to be a supplemental or enrichment activity for these two lessons.
Financial Fitness for Lifeis a comprehensive personal finance curriculum for K-12 students that teaches students how to make thoughtful, well-informed decisions about important aspects of personal finance, such as earning income, spending, saving, borrowing, investing, and managing money. Visit CEE’s Financial Fitness for Life websitefor more information on the publication and how to purchase it.
- List the costs of owning a car
Compare the costs of buying a new car with the costs of buying a used car
- Ask students what kind of car they would like to drive. Encourage them to discuss the reasons we have so many different kinds of cars available for purchase today. Ask how the car they want to drive will meet their needs for having transportation to and from school or to and from work.
- Ask students to list the different types of costs associated with owning a car. Remind them that we have many options when deciding what kind of car to drive and that it is important to determine which car best fits our needs and our budget.
- Introduce the video Better Money Habits: Comparing the Cost of New and Used Carsby explaining that it examines the process used to determine which car would be best for them to purchase. Provide students with a copy of Handout 7.1; ask them to complete the handout while watching the video.
- Show the video. After viewing the video, discuss the information in the handout to be sure they understand the various costs.
To conclude this activity, remind students that buying a car is one of the most expensive purchases they will make. The actual cost of the car is only one of the expenses they will face while owning and operating it. Being more aware of the ongoing costs will help ensure they are making the best choice.
This lesson may be extended by using the PACED Decision-Making model in Lesson 1 of Financial Fitness for Life, Grades 6-8, to emphasis the decision-making process.
Have students write a paragraph explaining which type of vehicle (new or used) might be the best option for their family to purchase.
To assess student learning in this lesson, have students answer the following questions:
What are the most important things to consider when you want to buy a car?
Answers: The price of the car, your monthly budget, the monthly payments, gas mileage, the number of miles you drive, insurance costs, potential maintenance costs, your personal needs.
What are some of the advantages of buying a new car?
It may get better gas mileage than an older car; it may have more safety features than an older car; it may have lower maintenance costs than an older car; it may last longer than an older car.
What are some of the advantages of buying a used car?
It may cost less than a new car; it may have lower insurance rates than a new car; it may have lower monthly payments than a new car.