Discuss the role of the interest rate and the cost of financing on your purchase decision.

Consider your last vehicle purchase and the decision making process you engaged in while deciding what vehicle to purchase or if a new vehicle was the right decision. While analyzing your decision, keep in mind that everything from the interest rates to the price of gasoline is driven by the economy in one way or another.

Develop a 1,400-word analysis of your decision-making process in which you include the following:

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  • Discuss the role of the interest rate and the cost of financing on your purchase decision. Interest rates are derived from the supply and demand for money and the actions of the Federal Reserve System. What was the rate of interest you paid on your vehicle loan? Were interest rates rising or falling at the time of your decision?
  • Examine the influence of gasoline prices on the choice of vehicle you selected.Gasoline prices rise and fall dramatically based on economic supply of and demand for crude oil. When gasoline prices are low, Americans buy larger, heavier autos, SUV’s and pick-up trucks. When gas prices are high, Americans purchase more compact and fuel efficient vehicles. When you purchased your last vehicle, were crude oil and gasoline prices rising or falling?
  • Discuss the following in regard to your household at the time of your purchase:
    • Were you employed?
    • Was the economy growing or contracting (recession)?
    • If you were employed, did you take into consideration the risk that you might lose your job if a recession occurred during the period of your loan pay-back?

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