The Car Loan Challenge: Applying Algebra to Real-Life

This engaging, real-world algebra activity places students in the driver’s seat of a major financial decision — purchasing their first car. Designed for high school students, this interactive worksheet combines storytelling, algebraic reasoning, and exponential functions to help students understand the true cost of a car loan.

🚗 Storyline:

Students have just graduated high school and landed their first part-time job. Eager to gain independence, they set out to buy their first car. With only $4,000 saved up for a down payment, they'll need to finance the rest with a car loan. The dealership offers three different loan options — each with a different interest rate and loan duration.

Students choose a car from a list of realistic 2025 models, input their down payment, and explore the impact of each loan option. Their goal? Use math — not guesswork — to determine which loan costs the least in total interest paid, while balancing monthly affordability.

📚 What Students Will Do:

• Select a car using interactive image sliders
• Use the loan payment formula to calculate monthly payments
• Calculate total payments and total interest for each of the loan options
• Compare all three loan options using calculated results and graphs
• Make a final decision and justify it with math

🎯 Learning Goals:

• Apply exponential and algebraic equations to real-life scenarios
• Interpret how variables such as loan term and interest rate impact total cost
• Make data-informed decisions and explain mathematical reasoning

💡 Why Teachers Love It:

This activity is ideal for reinforcing algebra skills with authentic financial literacy. It combines real math, real life, and real decision-making — making abstract concepts immediately relevant. Teachers can use it in Algebra 1, Algebra 2, or Financial Math courses as a project, warm-up, or capstone task.