1 Chapter 8 – Homes and Cars • Theme: get most for money with well thought-out spending decisions – Do homework – separate wants and needs – Make selection – compare alternatives, quality, features and price tradeoffs • Base on choice within budget • Maintain purchase – see complaints section
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1
Chapter 8 – Homes and Cars
• Theme: get most for money with well thought-out spending decisions– Do homework – separate wants and needs– Make selection – compare alternatives, quality,
features and price tradeoffs• Base on choice within budget
• Maintain purchase – see complaints section
2
Vehicles
Narrow choices – needs, wants, affordability
Selection – test drive, compare operating cost
Invoice price isn't whole story; rebates? 0%?
Financing – find lowest cost sourceNegotiate price first, financing is separate
Dealer may offer low rate; compare with rebate
Credit union – probably the best source
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Car Financing
• Loans and leases
• Sources: credit unions, bank, car finance companies
• Loan/Rebate tradeoff– One or the other– Is the rebate worth more than the interest
savings?
4
Car Leases
• Leasing – lessor owns and rents to you
• Pricing = vehicle + interest - residual value +/- other
• Closed-end (walkaway) – lessor has risk on residual
• Open-end – if market value less than estimated, you pay difference
5
Auto Loan Discrimination
• How financing system works– Dealer sends credit info to finance company.– Loan approved at minimum rate say 8%– Dealer may add up to 3%– Finance company buys loan at 8%, dealer
keeps 3%
• Allegations: markup varies by ethnicity even with comparable credit records
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Other Dirty Tricks
• www.autodealerscam.org
• Looks at unfair tactics used by dealers to manipulate customers
• Lists and explains 13 watchouts and other advice