Reference no: EM133107284

Question - People borrow money or use credit to purchase something in the present that will be paid for with future income. Borrowing increases the ability to purchase the things people want now, like a new car! A person who is considered "creditworthy" is one who is trusted to borrow only what he or she can repay. Before a person can make a big decision like buying and financing a new car, they must first analyze their monthly income and expenses to figure out how much they can actually afford per month or explore the option of buying the vehicle "outright" without financing (using savings). The concept that "there is no such thing as a free lunch" means that there is a cost to every decision, whether monetary or intrinsic. Good decisions require a clear understanding of alternatives.

You may use online sites like (autotrader.ca) or any other choice of your vender/s to do your research. Also, you can use the online Auto loan calculator to identify the interest rates and monthly payments.

Gather pricing information on two cars you may want to buy. Research interest rates you would qualify for and the length of the loan desired.

Calculate the monthly payment, total finance charge and total cost of loan for each of the two vehicles.

Write about what vehicle you can afford to buy and at what price. Which loan would you take and why? What features make this loan more appealing than the others? Include in your essay how your new car payment impacts your monthly budget and how limited resources cause people to make choices.