Installment Credit
The purpose of this lesson is for students to understand the interest formula, how installment credit works, and the types of items that might be purchased using installment credit.
The learner will :
 calculate interest on installment loans.
 calculate monthly payments on installment loans.
 evaluate alternative financing options and make positive decisions.
 Misc. construction paper, scissors, markers, etc.
 An assortment of car and house magazines
 Learner copies of Buying on the Installment Plan (Attachment One)
 Learner copies of Installment Math Problems (Attachment Two).
 Instructor copy of Lecture Notes:Purchasing that "Dream" Car (AttachmentThree)
 Assorted auto salesmagazines (minimum of one for every two learners)
 Learner copies of Financing a Car Overhead (Attachment Four)
 Slips of paper with dollar amounts ranging from $75 to $215 (Minimum of one slip of paper bearing an amount for every two learners
 Learner copies of Financing a Car Assignment (Attachment Five).
 Instructor copy of Lecture Notes: Purchasing that Dream House (AttachmentSix)
 Assortedrealestate monthlysalesmagazines (minimum of one for every two learners).
 Learner copies of Financing aHouse Overhead (AttachmentSeven)
 Slips of paper with dollar amounts ranging from $350$1,000 (Minimum of one slip of paper bearing an amount for every two learners
 Learner copies of Financing aHouse Assignment (Attachment Eight)
 Completed learner copies of My Future Money Pie Chart at 55 Years of AgeHomework(Attachment Fivefrom Lesson One)
 Learner copies of My Future Money Pie Chart at 55 Years of Age Revisited (Attachment Nine)
Instructions
Anticipatory Set:As the learners are entering the classroom, be busily lookingthrough car magazines and/or a house magazines. When everyone is seated, holding the magazine in such a way that the learners will be able to see what you are looking at, ask them if they've every given any thought about their dream car or their dream home.After a number of ideas have been shared,ask if they think at some time in the future, they believe that they will be able to buy either their dream house or car with cash? With credit? And is there much of a difference how one goes about buying with cash or credit? Have them share the reasons that they believe as they do.
Share the informationon Buying on the Installment Plan (Attachment One), the interest formula (I=PRT) and demonstrate an installment credit math problem.
Placethe learners in groups of three, distributeand assigneach groupthe Installment Math Problems (Attachment Two). The students will work together as a group to solve the problems.Tell them that they will not only need tofind the correct solutions to the various problems, but they will need to make a determination as to whether or not they think it is a good idea for those involved to finance their purchases in this manner, giving rationale for their decision.
Share the informationon Lecture Notes: Purchasing that "Dream" Car (AttachmentThree).
Pairup the learnersand distribute an auto salesmagazines (These local magazines, can easily be obtained for free at news stands).Ask each group to select a 'dream' car.
Using one of the 'dream' cars as an example model an installment credit problem for the class Financing a Car Overhead (Attachment Four).
Have each paired group draw a slip of paper with a dollar amount onit from a container. Tell them that thisis the amount they have 'budgeted' to spend on their monthly car payments. Have them find two or three cars in the auto salesmagazines that they would be able to purchase and compute the financing foreach carusing the Financing a Car Assignment (Attachment Five).
Have each group draw a replica of their favorite selected 'dream' car for display listing somewhere on the car its year, name, make/model and the total amount of money it will ultimately cost iffinancedover 3, 4, or 5 yearsperiod given its 'asking' price and their budgeted allocated monthly car payment.
Share the informationon Lecture Notes: Purchasing that "Dream"House (AttachmentSix).
Pairup the learnersand distribute a real estate monthly sales magazine (These local magazines can easily be obtained for free at news stands). Ask each group to select a 'dream'house.
Using one of the 'dream houses'as an example, model an installment credit problem for the class Financing aHouse Overhead (Attachment Seven).
Have each paired group draw a slip of paper with a dollar amount onit from a container. Tell them that is the amount they have 'budgeted' to spend on their monthlyhouse payments. Have them find two or threehouses in the real estate monthly sales magazines that they would be able to purchase and compute the financing for them using the Financing aHouse Assignment (Attachment Eight).
Have each group draw a replica of their of favorite house fordisplay and list the total cost of the house given the interestrate being charged over the 30 year payment period.
Distribute copies of the My Future Money Pie Chart at 55 Years of Age Revisited (Attachment Nine) andtell the learners to redraw their anticipated uses of money reflected on their original My Future Money Pie Chart at 55 Years of Age (Attachment Five Lesson One), if at that time they were to find themselves to be "overextended" with credit payments equal to $ 50,000 annually.
In writing, have the learnerscompare the original My Future Money Pie Chart at 55 Years of AgeHomework(Attachment Five Lesson One) proportions with the one they just drew My Future Money Pie Chart at 55 Years of Age Revisited (Attachment Nine)and respond in writing to these prompts: "How do these proportions of the four possible money usages compare with that of your original drawing? What impactmight debt have on Saving, Spending, Investing, and Donating? In what ways might avoiding the abuse of credit be considered a civic virtue and someone who avoids abusing credit be considered a good citizen?
Anevaluation of the learner's understanding of mathematical computationcalled for in these assignmentsas well as his/her contributions to classroom discussion and the depth of thought and understanding evident in the reflection assignment will form the basis for the assessment of these lessons.
Philanthropy Framework

Strand PHIL.II Philanthropy and Civil Society

Standard PCS 01. Self, citizenship, and society

Benchmark HS.4 Describe and give examples of characteristics of someone who helps others.

