Lesson plan · Money After High School · Lesson 6
Buying and Financing a Car
Total cost of ownership and how auto loans work.
- 45 minutes
- Grades 9–12
- Beginner
- Activity: pairs
Objectives
Students will be able to:
- Calculate the total monthly cost of owning a car
- Explain depreciation
- Apply the 20/4/10 guideline
Materials
- Slide deck and a projector
- Worksheet (one per student)
- Loan Calculator (projected, or on student devices)
- Exit ticket slips (bottom of the worksheet)
Standards
- National Standards for Personal Financial Education (2021)
- SpendingManaging Credit
- Texas TEKS §113.76 Personal Financial Literacy and Economics
- (6) The student understands how to set personal spending goals.
- (7) The student understands the costs and benefits of borrowing.
Topic-level alignment by FLC. How we map standards
Background reading
The official sources this lesson is based on.
- Auto loans (opens in a new tab) · consumerfinance.gov
- Financing or Leasing a Car (opens in a new tab) · consumer.ftc.gov
- Buying a Used Car From a Dealer (opens in a new tab) · consumer.ftc.gov
45-minute agenda
0–5 min
Warm-up
Post: “A car ad says “$299 a month!” What else will you pay besides that?”
Teacher note: Insurance, gas, maintenance, registration, and a down payment — often hundreds more a month.
5–12 min
Direct instruction
Present the lesson slides. Make sure students leave with these points:
- Total cost = payment + insurance + gas + maintenance + fees.
- New cars depreciate fastest early on.
- Get pre-approved; negotiate total price.
- 20/4/10: 20% down, ≤4 years, ≤10% of income.
Use the “See it” slide (The real monthly cost of a $15,000 used car) to make the idea visual.
12–17 min
Worked example
Walk through “Two cars, one budget” on the slides. Pause before the result and ask students to predict it.
17–22 min
Live demo
Project finance a car from the slides or the Loan Calculator. Change one input at a time and have students call out what they think will happen.
22–32 min
The True Cost
Format: pairs · 10 minutes
- A used car costs $15,000. The buyer puts 20% down and finances the rest at 8% APR for 4 years.
- Monthly costs: insurance $150, gas $120, maintenance $60.
- Pairs use the loan calculator to find the payment, then total all monthly costs.
- Pairs check the result against the 10% guideline for someone earning $4,000 a month before taxes.
What to look for: Down payment $3,000; loan $12,000 → $292.96/month. Total ≈ $622.96/month, which is over the 10% guideline of $400.
32–37 min
Check for understanding
Use the question slides — or run them as a Four Corners game. Questions:
- What's the smartest response?
- The loan payment is the only monthly cost you need to budget for when you buy a car.
- Why should you get a used car inspected by an independent mechanic?
37–42 min
Discussion
- Do you need a car where you live? What are the alternatives and their costs?
- Why do dealers focus on monthly payments?
42–45 min
Exit ticket
Prompt: What does “depreciation” mean for a car?
Differentiation
Common misconception
“If I can afford the monthly payment, I can afford the car.” Insurance, gas, and repairs are part of the real cost.
Support
Give pairs a cost table with each line labeled.
Extension
Compare the total 4-year cost of a $15,000 used car and a $28,000 new car using the same assumptions.
Homework or make-up work
Students can complete the full interactive lesson — including its knowledge check — at learnwithflc.org/courses/money-after-high-school/cars. No account needed; progress saves on their device.