Car Loan - Effect of Loan Duration

In this worksheet, students will explore the relationship between loan duration, monthly payment, and total interest to be paid for a car loan. The scenario involves a $40,000 car loan at an interest rate of 5%. Students will use a slider to adjust the loan duration and observe how it affects the monthly payments and total interest. They will record their observations in a data table to understand how loan duration influences overall loan costs.

Activities:

• Scenario Presentation: Students will be presented with a car loan scenario - Loan amount: $40,000 and Interest rate: 5%.
• Slider Activity: Students will use a loan calculator with a slider to adjust the loan duration. The calculator will display the monthly payment and total interest based on the selected loan duration.
• Data Recording: Students will fill in a data table with the values of monthly payment and total interest for different loan durations, such as 1 year, 2 years, 5 years, 8 years and 10 years.
• Reflection: Guided questions will help students reflect on the importance of choosing an appropriate loan duration based on their financial situation and goals.

Key Learning Outcomes:

• Loan Duration Awareness: Students will understand how loan duration affects monthly payments and total interest.
• Financial Data Analysis: Students will develop skills in analyzing financial data related to loan agreements.
• Informed Financial Decisions: This worksheet will help students appreciate the significance of loan duration in making informed financial decisions when taking out loans.