Buying Your First Car

Buying Your First Car

• Buying a car• Buying a new iPod touch• Buying lunch• Buying a house• Going to prom

Average Prices• Buying a house: $177,900• Buying a car: $30,000• Prom:

– Girl: $400-$600– Guy: $200-$400

• Buying an iPod touch: $299• Buying lunch: $9

Bottom Line?

Next to buying a house, buying a car is the biggest expense most people face

Terms to Know• Dealer Invoice Price:

– The price the dealer has paid the manufacturer for the car

• MSRP: – Manufacturer’s Suggested Retail Price– Usually appears on sticker– Ex: Nordstrom Rack

• Sticker Price:– The price the dealership is asking for a new car– Will include additional fees due to transportation

costs, dealer prep (washing, gas), etc. • Actual Selling Price:

– Price you negotiate!– Why might stores charge different amounts for the

same car?

Terms to Know• Base Price: – The cost of the car without options, but

includes standard equipment and factory warranty

• Ownership Costs: Fixed – Purchase price– Registration, title, license plate

• Operating Costs: Flexible – Gas– Tires– Oil changes

Terms to Know• Book Value:– the value of a used car listed in pricing

books (Kelley Blue Book)– www.kbb.com

• Asking Price:– the amount a seller wants for his/her

used car (you may be able to buy the car for a slightly lower price than this)

Do Some Research• You’ll be less likely to feel pressured

into making a hasty or expensive decision and more likely to get a better deal.

Questions to Ponder• How much can I afford to

spend?• What is the cost of car

maintenance?• Where is the nearest shop that

services the kind of car I want?• Are parts readily available for

the kind of car I want?

Let’s Practice: Reading a Sticker• $20,000• $26,000• $28,000• Range: $20,000-$28,000+–Would they ever charge more than the

sticker price? Why?

Let’s Practice: Name That Car

• There are approximately 48 different car companies that you can choose from in the U.S.–Make: Manufacturer (Ex: Ford)–Model: Type (Ex: Mustang)

• How many can you identify??

• 1) Ford Mustang– $

• 2) Ford Explorer– $

• 3) Audi S5– $

• 4) Dodge Caravan– $

• 5) Minicooper-S – $