Module 28

Buying Your First Vehicle

This module helps students understand the personal, financial, and societal costs of transportation before making one of their first major purchase decisions.

Students compare transportation options, evaluate new and used vehicles, examine buying versus leasing, break down auto loans and amortization, and understand why car insurance and maintenance matter.

Module At A Glance

Grade Levels:

7th - 12th

Est. Length:

2-4 Hours (21 slides)

Activities:

1 Activities

Articles:

0 Articles

Languages:

English & Spanish

Curriculum Fit:

Math, Business, Economics, CTE, Social Studies

Standards Alignment:

CEE National Standards, Jump$tart National Standards & Relevant State Standards

Guiding Questions

What are the factors that go into deciding on a mode of transportation?
What are the non-monetary costs associated with different modes of transportation?
Why is it beneficial to the economy to have easy access to transportation?
How can one go about buying a car that is the best deal for them?
Why can buying a used car be a better deal than buying a new car?
How can maintenance and proper usage reduce the cost of transportation?

Enduring Understandings

Efficient transportation is needed for a society to have a strong economy.
All modes of transportation have societal, financial, and personal costs that should be considered when choosing how to get around.
Buying a used car can offload the rapid depreciation of a new car onto the seller.
Properly maintaining and driving a car efficiently can greatly increase its life and fuel efficiency.
Vehicle ownership can provide independence, comfort, and an opportunity to build credit, but it usually costs more than public transportation.

Module Vocab & Key Topics

Public Transportation: Shared transportation systems such as buses or trains that can move people at a lower personal cost than owning or hiring a private vehicle.
Rideshare: A transportation service, often arranged through an app, where a driver provides a paid ride for a passenger.
Auto Loan: A loan used to purchase a vehicle, typically repaid through fixed monthly payments over a set loan term.
Depreciation: The decrease in a vehicle's value over time, especially during the first years after a new car is purchased.
Useful Life: The period during which a vehicle can be expected to operate safely and reliably before repairs or replacement become more likely.
Trade-In Value: The amount a dealer may offer for a current vehicle when it is exchanged as part of buying another vehicle.
Lease: An agreement to use a vehicle for a set period in exchange for payments, usually without owning the vehicle at the end of the term.
Down Payment: Money paid upfront toward the purchase price of a vehicle, reducing the amount that must be borrowed.
Annual Percentage Rate (APR): The yearly cost of borrowing money, expressed as a percentage, that affects the total cost of an auto loan.
Loan Term: The length of time a borrower has to repay a loan; longer terms may lower monthly payments but increase total interest paid.
Amortization: The process of paying off a loan over time through regular payments that cover both principal and interest.
Principal: The original amount borrowed on a loan, not including interest or fees.
Interest: The cost of borrowing money, usually paid as part of each loan payment.
Repossession: The process where a lender takes back a vehicle because the borrower did not keep up with required loan payments.
Car Insurance: Coverage that helps pay for property, liability, and medical costs related to a vehicle accident, often required by state law.
Liability Coverage: Insurance coverage that helps pay for injuries or property damage a driver causes to someone else.
Registration: The official process and fee required by a jurisdiction to legally operate a vehicle on public roads.
Maintenance and Repairs: Regular service and fixes needed to keep a vehicle safe, reliable, and efficient over time.

Worked Examples

Car Costs In Action

Four costs of a car that the sticker price never mentions.

Figures current · August 2026

Depreciation

Value Falls Fastest Early

valueₜ = price × (1 − d)ᵗd ≈ 15% / yr

A new $45,000 car sheds about 16% — roughly $7,200 — in its first year, then loses a little less each year after, keeping about 45% of its value by year five. The drop is a fixed share of a shrinking balance, so the biggest dollar hit comes first, before anything wears out.

$7,200lost in year one alonejust $3,150 in year five

Depreciation takes a fixed share of a shrinking value, so the largest dollar loss lands in year one — long before the car wears out.

Total cost

The Payment Is Just the Start

TCO = price + interest + insurance + fuel + maintenanceover 5 years

Buy a $25,000 car and keep it five years. Financing adds about $4,000 in interest; insurance runs roughly $9,000, fuel about $7,000, and maintenance and repairs near $5,000. Every one of those is spent after the sticker is paid — and together they equal a second car.

$50,0005-year cost of a $25,000 car2× the sticker price

The purchase price is under half the story — interest, insurance, fuel, and upkeep together roughly double what a car costs to own.

Lease vs buy

Renting Miles vs Owning Them

net cost = paid − equityequity = 0 on a lease

Drive a $30,000 car for three years. A lease charges only the ~$12,000 of value it loses plus about $2,400 in fees — roughly $400 a month — then you hand it back. Buy it instead and you absorb the same depreciation, but still hold an $18,000 car you can sell.

$0owned when a 3-year lease endsthe buyer keeps $18,000

A lease's smaller outlay buys only depreciation and fees and ends at zero owned, while the buyer's larger outlay returns as an $18,000 resale asset.

New vs used

The Value Sweet Spot

cost/mile = total cost ÷ milestotal ÷ lifetime miles

Spread every dollar of ownership over the miles you drive. Buy new and the steep first-year depreciation loads onto those early miles, so cost per mile starts high — near $0.70 here. A three-year-old car has already shed that drop and still has most of its useful life left, bottoming near $0.47.

$0.47/milowest, at about 3 years old$0.70/mi bought new

Cost per mile bottoms out on a lightly used car, which skips the steepest depreciation while keeping most of its useful life ahead.

Source: Experian, "How Much Do Cars Depreciate per Year?", citing Kelley Blue Book data (new-car depreciation curve), checked 2026-08-24. The ownership, lease-versus-buy, and new-versus-used figures are illustrative scenarios, with totals derived from the inputs shown. Reviewed August 2026.