Henry Case Study - Car Purchase - Lenders of Finance - Car Insurance - Personal Finance Research Report Assessment Answer

Assessment Task:

Henry Case Study Personal Finance Research Report Assessment Answer

For the following task, you are to investigate the costs involved in making a large purchase. This will enable you to make informed judgements and take effective decisions regarding the use and management of money. 

Choose ONE of the following options: 

•   Scenario 1: Purchasing a car 
•     Scenario 2: Overseas travel

Scenario 1: 

•   Henry is going to purchase the following car from a dealership
•     2018 Hyundai Accent 1.6L, 6-speed Automatic, 4 door Sedan, semi-automatic, colour – Blue 
•     There any no factory/dealer options or non-standard accessories 
•    The vehicle will not be modified and it is brand new, so there is no damage
•   The car will cost $18,000.00. 

Henry’s income from his part-time job is $170 per week (take home).  He has $5,000 in savings. 

Lives at home with parents and the car will be parked on the street. 
Henry does not have access to secure parking.  
Age when obtained drivers licence: 18
No insurance claims 
Car insurance rating or No Claims Discount (NCD): None
Reason for owning a vehicle: personal use / private 
Approximate travel in km per year: 10,000 km
Henry will be taking a loan to purchase his car, so there will be finance on the vehicle

Your task is to investigate the financing and insurance options available. 

Provide a report covering the following: 

1.    Identify three different lenders of finance. ONE must be an Australian bank, ONE a credit union, and ONE a Finance Company. 
a)    Complete the table summarising the personal finance loan from each of your chosen lenders. 
b)    Using the information in the table above, justify which lender you would recommend borrowing from. 
c)    Complete the table below for the same lenders where Henry has decided to hold off his purchase until he has $9,000 saved. 
d)    Using this information from part (a) and part (c) complete the table below to show what would happen in terms of interest savings and length of the loans compared with the original scenario.
e)    Discuss how the level of deposit ($5000 vs. $9000) affects the outcome of the loan (eg. Time to repay, repayment amount, interest saving, affordability etc) 
f)    Explain how a person’s ability to repay and credit rating would impact on to get a loan.

2.    a) Complete the table below to identify costs for insurance. Identify three different Australian insurance options for comprehensive car insurance. 
b)    How do Henry’s age and limited driving experience affect the cost of insuring the vehicle? 

c)    Identify 3 ways that Henry could reduce the cost of his insurance premium. 

d)    Justify which insurance cover (provider) you would recommend. 

Scenario 2: 

•    Henry and his friend Ben are both 18. 
•    Henry’s income from a part-time job is $170 per week (take home). 
•    He has $5,000 in savings. 
•    He has decided after the HSC, he would take a gap year and travel. Henry wants an adventure and will be going snowboarding in Canada. 
•    He is currently fit and well and does not have any pre-existing medical conditions to limit his adventure. 
•    He is going to purchase a round the world 7 stop trip, and plan to travel for 4 months. 
•    The airfare is $3,285. It is estimated that Henry’s trip will cost him $16,500.

Your job is to investigate the financing and insurance options available.  Provide a report covering the following: 

1.    Identify three different lenders of finance. ONE must be an Australian bank, ONE a credit union, and ONE a Finance Company. 
a)    Complete the table summarising the personal finance loan from each of your chosen lenders. 
b)    Using the information in the table above, justify which lender you would recommend to borrow from. 
c)    Complete the table below for the same lenders where Henry has decided to hold off his purchase until he has $9,000 saved. 
d)    Using this information from part (a) and part (c) complete the table and show what would happen in terms of interest savings and length of the loan compared with the original scenario. 

e)    Discuss how the level of deposit ($5000 vs. $9000) affects the outcome of the loan (eg. Time to repay, repayment amount, interest saving, affordability etc) 

f)    Explain how a person’s ability to repay and credit rating would impact on to get a loan.

2. a) Complete the table below to identify costs for insurance. Identify three different insurance options for travel insurance. Remember that Henry wants to undertake some extreme sports, such as snowboarding in Canada.
b)    If Henry chose not to participate in extreme sports like snowboarding, how would this affect the cost of insurance? 

c)    Identify 3 ways that Henry could reduce the cost of his insurance premium. 

d)    Justify which insurance cover (provider) you would recommend. 

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