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Teaching by Topic: Car Loans

Here are a bunch of tips, learning objectives, worksheets, and pre-built lesson plans to help you build your curriculum to teach students about auto loans!

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Getting a car is one of the most exciting milestones for young adults. Often, achieving this goal requires getting a loan. Teachers can help their students by showing them the ins and outs of car loans, ensuring that kids know how to find a reasonable loan and see if they can afford the payments. They learn about interest, predatory lending, and how to include car loan payments in their monthly budgets. In this guide, you can find lesson plans about teaching car loans, learning objectives covered in the National Standards for Personal Finance Education, worksheets to introduce the concept, engaging games and activities, and tips to successfully cover the topic in different age groups.

National Standards for Personal Finance Education

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K – 4th Grade

Tips for Teaching About Car Loans

Kindergarten through 4th-grade students learn about credit but focus more on informed decision-making rather than specifics like car loans. These lesson plans and activities build their awareness of credit, show kids how to analyze choices, and prepare them for more advanced learning later.

Learning Objectives

  • Spending 4.3b: Provide examples of financial choices that have opportunity costs.
  • Spending 4.4a: Compare the costs and benefits of purchasing an item for
  • people with different characteristics (e.g. age, income).
  • Spending 4.6b: Compare the effects of using debit versus credit cards to make purchases.
  • Managing Credit 4.2b: Discuss reasons people may prefer to buy something with credit rather than paying cash.

Lesson Plans

  • KMLP 1st Grade – Spending: Students see how to incorporate the decision-making process when spending. They read a book and watch a video that shows how money is limited, and people need to monitor spending habits closely.
  • KMLP 2nd Grade – Opportunity Cost: Kids learn about tradeoffs and how spending in one area affects their spending power in another. They see how to prioritize needs over wants, and teachers can introduce what types of needs adults often have, like housing and cars.
  • KMLP 4th Grade – Spending: This lesson includes a simulation to show kids how to prioritize spending, including on necessary things like cars. Teachers can demonstrate how car loans and other recurring payments can factor into budgets.
  • KMLP 4th Grade – Managing Credit: This lesson covers many aspects of credit, including interest, how to improve credit scores, and how securing good loan terms can help their finances. They watch a video and read a book to see how loans work.
  • Sharing a Story About Borrowing: This lesson has students read an engaging story about responsible borrowing. They see that paying people back on time can lead to positive outcomes, which teachers can extend into car loans.

Worksheets

  • Decision Tree: This worksheet shows kids how to analyze any decision.
  • Think Sheet: This worksheet has kids reflect on a poor decision they made and how to improve the process in the future.
  • Financial Literacy for Children: This worksheet shows kids how money works and the decisions people make with finances.
  • Decision Making Comic Strip: Students draw a comic to analyze their decisions.
  • Consequence/Decision Map: This simple worksheet shows students the good and bad results of decisions, which teachers can apply to any situation, including finances.

Teacher Guides by Grade Level

5th – 8th Grade

Tips for Teaching About Car Loans

Your 5th – 8th graders dive into car loan specifics. They see how to compare interest rates, boost their borrowing potential, and calculate car loan costs. Playing games and using hands-on activities are surefire paths to success for your kids.

Learning Objectives

  • Spending 8-4b: Explain how various payment methods are used to purchase goods and services.
  • Managing Credit 1b: Compare lenders based on type of credit offered, interest rates, and fees.
  • Managing Credit 8-3a: Describe the effect of higher interest rates and longer loan terms on the total cost of a loan.
  • Managing Credit 8-3b: For a given monthly payment, loan amount, and loan repayment period, calculate the total amount of interest paid by the borrower.
  • Managing Credit 8-6c: Justify the use of credit for a specific purchase.

Lesson Plans

  • KMLP 5th Grade – Credit and Debit: Students learn the basics of credit, including interest, terminology, and how consumers can use it to their advantage. They read a book, reflect on how they could use loans to get a car and see the pros and cons of auto loans.
  • KMLP 8th Grade – Managing Credit: Middle school students see how credit works, including credit scores and their impact on car loan terms. They compare and contrast various loans, determine how to avoid predatory lending, and find the best car loans.
  • Purchasing a Vehicle: This lesson from the Atlanta Fed walks kids through the car-buying process. It shows them the best ways to buy a vehicle, and breaks down how to get a loan and determine the total costs.
  • Being A Responsible Borrower: Students develop positive borrowing strategies in this lesson. They see how staying on top of their credit can get them better rates and pay less over time for car loans.
  • Cars and Loans: This lesson focuses on car loans, showing how to shop around for the best terms. It also goes into warranties, financing, and co-signers to get a car loan.

Worksheets

  • I’m Buying a Car: This worksheet has students use online tools to determine the costs of purchasing a car. They learn about interest rates, financing a vehicle, and how to compare loans to find the best duration and monthly payments for their incomes.
  • Buying a Car: Cash Vs. Interest: This worksheet shows students the perks and drawbacks of getting a car loan instead of using cash. They learn research skills and see how to find interest rates quickly.
  • Dream Car Loan: This worksheet asks students to complete information about their dream car. They see how much it would cost with interest and if they could afford that vehicle.
  • Deciding Which Car and Car Loan You Can Afford: This worksheet shows students how to determine monthly payments and more.
  • Dream Car Math: Students complete calculations in this worksheet to see how interest affects loan costs.

Games and Activities

  • Shady Sam: This game lets kids see how lenders can take advantage of consumers. 
  • Buy A Car Project: This interactive activity lets students play around with various car loan-related numbers to see how the process works.
  • Cartoons: Car Payments: In this engaging activity, students analyze cartoons about car loans to deepen their understanding of the concept.
  • Compound Interest Game: Students play a game to compare compound vs. simple interest, seeing the benefits of it and also how it can pile up in loans.
  • Car Payment Calculator: Students input numbers to see how car loans change based on down payments, interest rates, and durations.

Teacher Guides by Grade Level

9th – 12th Grade

Tips for Teaching About Car Loans

Your high school students may already own a car, or they’re likely thinking about purchasing one soon. Use hands-on, practical resources to demonstrate the best auto loan analyses so that they can optimize their finances.

Learning Objectives

  • Spending 12.5b: Brainstorm consumer research strategies and resources to use when making purchase decisions.
  • Managing Credit 12.6a: Identify examples of loans that may require down payments.
  • Managing Credit 12.7c: Explain how a person can get a free copy of their credit report and why this is advisable.
  • Managing Credit 12.8a: Identify the main factors that are included in credit score calculations.
  • Managing Credit 12.8c: Recommend ways that a person can increase their credit score.

Lesson Plans

  • KMLP 12th Grade – Managing Credit: This lesson shows students how to build credit and boost their credit scores. They learn how lenders determine interest rates for consumers with different creditworthiness scores.
  • Describing Credit Scores: In this lesson, students understand credit scores and how they can affect their finances. They also learn about the variables that affect credit scores, setting them up to get a good car loan.
  • Determining How Down Payments Affect Loans: Students see how different down payment amounts influence monthly and total loan costs in this lesson. They also see how installment loans can be useful for affording big-ticket items.
  • Cruz Buys a Car: This lesson has students follow a first-time car buyer (Cruz) through the process. They learn about persuasive sales tactics, how to research car loans, and how to compare options as they prepare to get financing and buy a car.
  • Car Loan Project: This lesson takes students through the steps of buying a car, from seeing commercials to securing a loan. They research car prices, see which makes and models fit their current needs, and use a calculator to determine various loan payments.
  • Deals on Wheels! Car Loan Project: In this lesson, students learn how to calculate monthly payments using different interest figures. They also determine the maximum monthly amounts they could afford to pay towards their car loan, and realize that every choice has consequences.

Worksheets

  • Creating a Buying Plan: This worksheet shows students the importance of making a plan, focusing on reflection and decision-making.
  • Decision Making: Your high schoolers should know how to self-analyze decisions, and this worksheet walks them through the steps to succeed.  
  • Comparing Auto Loans: This worksheet asks students to compare more than one loan to see the interest rates, loan duration, monthly payments, and the total cost over the life of the loan.
  • Group Project Worksheet: Students work in teams in this worksheet to see how to find and finance the car they want.
  • Cosigning Loans And Sharing Credit: In this worksheet, students learn about the pros and cons of taking on a loan with others.

Games and Activities

  • Take Control Of Your Auto Loan: This guide provides valuable information for students in every chapter of the loan progression. It shows kids how to budget for an auto loan, shop for a loan, and negotiate the best terms.
  • Auto Loan Calculation: Use this straightforward calculator to see how different interest rates and durations will do to their car loan payments.
  • Simple Interest – Buying a Car: This math-intensive (but doable) activity is excellent for students to quickly calculate the costs of buying a car and getting a loan.
  • FICO Score Estimator: Students can play with different numbers to see how their credit score, a critical piece in the auto loan equation, moves up and down.
  • Describing Credit Scores: This group activity shows students how to interpret a credit score and recognize what factors affect the scores. They finish by writing a summary statement.

Teacher Guides by Grade Level

More Teacher Resources

About the Author

Peter Brown

Peter Brown is a National Board Certified teacher with over two decades of experience in the classroom. He loves working with students of all ages in many subjects, but particularly in practical areas like money education, to help kids achieve their goals. When he is not teaching or writing about financial literacy, you can find him surfing, hiking, skiing, or traveling to new places.

Last updated on: December 12, 2022