Teen Driving Contract: learn all the costs of driving

When creating a teen driving contract, it’s important to learn and manage the real costs of a car.  This activity will help you add the real costs of driving to any teen driving contract.

Online, you’ll find links to online resources for finding actual used cars in your area as well as the cost of new cars. Use this online resource or your local newspaper for car prices.

Choose the car you want to own and drive

 Used Car Prices at CarPrice.com / Edmunds / AutoTrader.com

Make: Model:

Year: Price:

Most people don’t pay cash for a car. They get a loan from a bank.

 Find APR at BankRate / Find APR at Chase

Online, you’ll find the Annual Percentage Rate. You can also find APR in the newspaper or by calling local banks. When you pay back the loan, you pay it over a number of years, usually one payment per month over 4 or 5 years. Each payment includes some of the money you borrowed and some interest. Interest is additional money you pay to the bank for the service of loaning you the money. It’s like the cost of the money you borrowed. Interest is computed using the APR, or annual percentage rate interest.

Annual percentage rate:

Compute your monthly loan payment

 BankRate Loan Calculator / 1ST Bank Loan Calculator

Online, you’ll find links to online calculators for computing loan payments. You can use these online calculators, or your teacher may help you use a regular financial calculator.

To compute a car payment (or any other loan payment) requires some business math. Most people use a calculator. You’ll use a calculator on the web. Before you click, remember the price of your car and the APR above. You’ll need them for the calculation. If you have trouble here, you can call a bank. Ask for a loan officer and tell them the cost of your car. They can tell you the payment amount. If you need more help, ask your sponsor.

Monthly Loan payment:

Just for fun, to see how much you’ll pay for the entire loan, multiply the amount of the monthly payment by the number of months to pay off the car:

License plates for your car

Call your local Department of Motor Vehicles to get an estimate.

Enter the cost here:

Costs of maintaining your car

Call a local auto service center to get estimates for your car, or look up costs in the newspaper. Enter costs per service.

Oil changes, each time:

Winterizing, each time:

Tires, for a set of four:

How much will gas cost? Gas prices rise and fall quickly. The costs add up…

(a) How many miles will you drive each day? __________

(b) How many miles per gallon does your car get? __________

(c) What’s the current cost for a gallon of gas? __________

Compute your TOTAL cost of gas for one year:

1. Divide miles driven (a) by miles per gallon (b): ________________

2. Multiply that number by cost for a gallon of gas (c): ________________

3. Then, multiply that by 300 days to get yearly cost: ________________

(Most people drive about 300 days per year)

For example: if you drive about 15 miles per day, and your car gets 22 miles per gallon, and gas costs $3.50 dollars per gallon, you will pay about $603 per year for gas. Here’s the math:

– 15 miles per day divided by 22 miles per gallon = 0.68 gallons per day

– 0.68 gallons times $3.50 per gallon = $2.38 per day for gas

– $2.38 times 300 days = $714 per year for gas

________________________________________

Estimate your car insurance

Call an insurance company to find the insurance cost of the car you chose in the questions above. Explain to the insurance agent that you are doing research for a career development project.

Monthly Charge: _______________

X 12 for yearly costs: _______________

________________________________________

Add it all up to get your yearly cost of owning and maintaining a car – use the values from the questions above:

Monthly loan payment X 12: _______________

+ License plates _______________

+ 3 oil changes _______________

+ 1/3 of tire costs _______________

+ Winterizing _______________

+ Total gas cost _______________

Total yearly costs: $_______________

________________________________________

Now, write some thoughts on this Activity: are you surprised at how much a car costs? Based on what you’ve discovered here, what you will do differently for your transportation?  How does this change what you’ll include in your teen driving contract?