Buying a car involves much more than just picking out the first one that catches your eye. Few of us can afford to purchase our dream car when we first get out into the “real world” and even fewer of us can afford to just go out and purchase whatever car strikes our fancy without any prior thought and research. The purchase of a car includes many “hidden” costs over and above the sticker price on the vehicle. One must consider ‘tax, tag and title’, emissions testing, car repairs and maintenance, gas, insurance costs, interest charges and so forth. Typically, when buying a new car the first step is to identify what price range you can afford. Then you must determine what your top choices are in that specific price range. Now you are ready to research, compare, check financing and insurance costs and make a final decision.
Step One – What is your price range? You need to consider your monthly net paycheck. Don’t forget that you are going to have rent and other costs that must be paid out of this paycheck! Don’t spend too much here and not have enough left for other areas (rent, groceries, utilities, etc.)
Step Two A – Research and compare! (For the Game of Life, you MUST purchase a car NO older than a 1997. For information purposes, the car cannot be any NEWER than 2005.) Look up your top choices (in your price range) at www.kbb.com and do a side-by-side comparison. (open INTERNET EXPLORER (if possible), go to the Kelly Blue Book website, click “Compare Used Cars” to the right under the “Quick Links” ta, enter your zip code and click continue, enter information for your top three choices) After all 3 of your top choices are entered, print the side-by-side comparison and retrieve from the printer. (Keep this clean and neat! You will place it in your Game of Life portfolio.)
Step Two B – Use the information in the side-by-side comparison to fill in your own side by side chart found on the Shared Drive: 1. What is the base retail? 2. What is the Miles Per Gallon for the City? For the Highway? 3. What are the safety features? 4. What type of warranty is given? 5. List the top 7 features you would absolutely require for your car. Then state whether the car has this feature.
Step Two C – Now go to www.edmunds.com, If you are buying a new car do the following: 1. Click on the tab “Car Reviews” at the top of the page. 2. Click “Search Reviews” 3. Click on the type of car 4. Then Click on your specific car (If only 2004 car is shown, you may have to do the used car process). 5. List the Pros and the Cons. If you are buying a used car do the following: 1. Click on the tab “Used Cars” at the top of the page. 2. Click on “Prices, Ratings & Reviews” 3. Click on the Make of the car 4. Click on the appropriate year 5. Click on the appropriate car 6. Click on the appropriate style 7. Click on “Editor’s Reviews” 8. If there are no Editor Reviews, Click on the “Consumer’s Reviews” along the left hand side of the page. 9. List some pros and cons found in either the Editor’s Reviews section of the Consumer’s Reviews section.
Step Three – You MUST call your parent’s insurance agent and get a quote for insurance for all three of your top choices. Remember that male/female and age make a difference in rates! (Use age 22 since we are ‘pretending’ that we are already finished with college/technical school.) You must CALL the insurance company! From past experiences, rates online are usually high, not that accurate and require way too much time filling out information on the Internet. Obtain the quote with the following specifications: YOU down as the primary driver of the car You are 22 years of age Standard coverage and deductible You will be financing the car for four years You may take: drivers education and multiple car discounts
Step Four – You are required to put a 15% down payment on your car and you MUST take a 48-month loan with the bank. Use the following interest rates for the buying your new car. On New Cars, use an interest rate of 4% and for Used Cars, use 8%. Click on http://www.edmunds.com/apps/calc/CalculatorController?tid=edmunds.n.pcalc.pcalc.into_calc.1.* OR go back to www.edmunds.com to calculate your monthly car payment. From the www.edmunds.com page, look down the middle of the page to the section headed up with the words “Get a Fair Deal” and click in the bottom right hand corner of the section titled “Calculators.” Then go to the bottom of that page and click on “Basic Loan Calculator”. At the window that pops up, enter the following information: 1. Sales Price (on your side-by-side comparison from www.kbb.com) 2. Gwinnett County’s current Sales Tax Rate (6%) (WRITE down the amount of actual tax!) 3. The amount of the down payment (15% of the sales price – for example, if my sales price is $20,000; I would multiply 20,000 by .15 to get my required down payment of $3,000) 4. The finance rate you received from calling the bank 5. A finance term of 48 months Note that the “Title, Registration and Other Costs” area fills in automatically as you enter the information. Leave the “Customer Cash Incentives,” “My Trade In Value,” and “Estimated Payoff on Trade” sections at zero (0). 6. Note the My Monthly Payment in the light blue box under the finance term section. Write this down! 7. Do these steps for EACH of the 3 cars.
Step Five – Determine your gas costs for the month. Based on driving the car 12,000 miles per year and the Miles Per Gallon rate you found (use the AVERAGE of the city and highway rates you found). For instance, if your average gas mileage is 25 mpg, take 12,000 and divide by 12 (months) to get 1000 miles in a month. Take 1,000 and divide by 25 (your average miles per gallon) and then multiply times the cost of a gallon of gas ($1.75) we’ll say.
Step Six – What is an Emissions Test? How much does it cost? (ask your parents)
Step Seven – What is Ad Valorem tax? You MUST call the Gwinnett County Tag Office and obtain the price of the tag for your top 3 car choices. For you slackers that did not attempt to get the information, or those of you that tried and could not get the right information, go to the following website. http://www.state.ga.us/DOR/ptd/cds/mvman/2005/ Then follow the instructions. Step Eight – What regular maintenance costs do you have? List 5. (ask your parents)
Step Nine – Present your data in a table like the one shown on the next page.
Step Ten – Make an informed decision regarding which of the three cars to purchase for the Game of Life. Create an Automobile Purchase Sheet showing a picture of the car you purchased, the sales price (base retail), amount of down payment, finance rate, the monthly payment, monthly insurance costs, approximate monthly gas costs, and tag cost. (Example is available for your viewing.) Also, create a table like the one shown on the next page. You will get a monthly cost for some items and a yearly cost for others. Multiply and divide as necessary.
The printed side-by-side comparison sheet, BOTH of your data tables and your Automobile Purchase sheet are turned in for a daily grade. Your grade is based on the completion of all items. This is due October 10, 2003. Additionally, this information is placed in your Game of Life Portfolios (the corrected versions, of course).
STEP NINE EXAMPLE
Side-by-Side Comparison Car#1/Car#2/Car#3
Base MPG Safety Top 7 Emission CA Retail Warrant Insuranc Down Monthly Monthly City Feature Feature and Sales Hwy y e Costs Pymt Pymt Gas Cost s s Tax Avg
STEP TEN EXAMPLE Year/Make/Model of Car Where Purchased
1 Time 1 Month 1 Year 4 Year Item Details Cost Cost Cost Cost Sales price: $_____ Car Sales tax: $____ Down payment: $____ Insurance Agency: _____ Type of Coverage: ____ Amount of Deductible: ____ Gas MPG City: ____ MPG Hwy: ____ Average MPG: ____ Tag/Ad What is it? Valorem Emissions What is it?
Maintenance List.