Personal Finance Autos and You. So You Want a Car, Huh?

Personal FinanceAutos and You

So You Want a Car, Huh?

$249

Well, hey, only $249 a month!

I can afford that!

Discussion Questions

What costs are associated with owning and operating a car?

Costs of owning a car FIXED Initial purchase price Registration and title costs Sales tax Financing costs Depreciation Insurance Scheduled maintenance Storage (renting garage space)

Costs of operating a car

VARIABLE Unscheduled repairs and

maintenance Gasoline Oil and other fluids Parking and tolls Tickets

How Much Can You Afford? The 10% rule

– spend no more than 10% of your take home (net) pay on a car payment

If you make $2000 a month, try to find a car payment of $200 at the most

Work with a budget

Before Buying a Car

Narrow your choices Research and compare Credit Pre-approval Visit Dealers Test/Inspect

Price Bargaining Schemes

Discussion Questions

What’s better NEW or USED? Compare the Advantages and

Disadvantages of New/Used Cars– Come up with 3 Pros and 3 Cons for

each

ANALYZE:NEW and USED Cars NEW CARS USED CARSPROS CONS PROS CONS

Places to Buy a Car

From a dealer From a private party From an auction Others?

– Internet?– Using the internet as a research tool

A used car from a dealer

Consider costs, reliability, dealer reputation

Read the "Buyer's Guide" sticker Consider the warranty and the

service contract What to do if you have problems?

A used car from a private party No warranty Cost less than from a dealer Make sure you get the TITLE. A TITLE proves ownership of the

car

5 Tips When Looking at Used Cars Check Body Condition Check Odometer Consider Mileage Get a Mechanic to Check the Car Get Registration and Title before

you buy

Electrical

Shock Absorbers

Tires

Brake Shoes and Lining

Suspension Arm

Steering Wheel

Exhaust Pipe

Engine

Radiator

Lights

IDENTIYFING PROBLEM AREAS IN USED CARS Muffler

THINK: What should a test drive include? Drive on bumpy roads, freeways, etc Run in all gears Test brakes Start the car several times Listen for strange noises Park the car on a clean surface and check for

drips Check lights, windows, radio,heater, A/C, etc.

A new car

Read about new car features and prices

Shop around Plan to negotiate price Learn the terms Consider the service contract

Types of warranties

As-is warranty Implied warranty Dealer warranty Manufacturer's warranty

Service contracts

Preventing problems Resolving disputes Comparing promises of warranties

and service contracts

AUTO INSURANCE

Why do you need it?– Required by Law– Good Idea in case you get in a wreck

How are insurance rates set?

Age Sex Marital status Personal habits

(e.g., smoking) Type of use Frequency of use Location

Driving record deductible Type of car Value and age of

car Type of coverage Type of car Grades

DEDUCTIBLES Usually either $500 or $250 Deductible

– The amount you pay after a Claim is filed– example: You back into a tree and do

$650 in damages.• Your deductible is $250, then the insurance

company pays you $400• Your deductible is $500, then the insurance

company pays you $150

DEDUCTIBLES (cont)

So why would you ever want a $500 deductible?

Accident free discounts– You may not even want to file a claim.– Keeps insurance rates down.

Types of coverage Bodily injury liability Property damage liability Collision Comprehensive Medical payments Uninsured motorist Rental reimbursement Towing and labor

WHAT IS THE CAR WORTH? New Cars

– MSRP• Sticker Price / Retail Price

– INVOICE PRICE• The Price the Dealer Pays

– Your goal? To get as close to the invoice price as you can!

Dealer Tricks

Highballing Lowballing Talk to the Manager Bait and Switch The Waiting Game Good Guy / Bad Guy