Major Life Purchases: Buying a Car

Why Buy a Car?  ___freedom______ ___transportation______ Increases your options: o Where you _live______o Where you _work______What Does it Take to Buy a Car?  ______ ______skills  ______skills  Patience  Requires knowledge of consumer rights  ______Costs & Knowledge of how to maintain Costs of Buying and Owning a Car Buying a Car  Accessories  ______ ______Costs of operating a Car  License (every year)  ______ Sales Tax  Oil and other fluids  Financing Costs  ______ Depreciation (biggest cost)  Maintenance and repairs (check owners  ______manual)  Parking and Tolls Budgeting for a Car Purchase  Know Your Budget o What are your fixed expenses? o How much can you afford for a vehicle? . Recommend no more than ______% of monthly income.  ______or Trade-In?  Double-check your estimate by prequalifying for a loan at a: o Bank o Credit Union

Steps for Buying a Car: How to Get the Best Deal

Step 1: ______Narrow Your Choices  Identify Your needs and ants  Determine what you can ______Questions to ask if deciding to spend your money 1. Do I really ______this item? 2. Is it worth the time I spend making the money to buy it? 3. Is there a better use for my money right now? Questions to decide on the right purchase. 1. What level of quality do I ______? 2. What level of quality do I ______? 3. What types of service and repairs does the dealer offer? 4. Should I wait until there is a ______on the type of car I want? 5. Should I buy a ______or ______car? 6. If I buy a used car, should I buy it from a dealer or from a private party? 7. Should I choose a car with a well-known name even if it costs more? 8. Do I know anyone who owns the type of car I want? 9. Are the warranty and the service contracts on the car comparable with warranties and service contracts on similar cars? 10. What do ______say about the type of car I want?

Decide whether to buy new or used. New vs. Used How much is a new car worth 5 years from now? Most Cars: ______% of the original value Honda Accord or Toyota Camry: ___% of original value Source: Kelly Blue Book A Big and Important Purchase  New Vehicle is the 2nd most expensive purchase in life. o 1st is a ______o A car is a long-term commitment  Average price: o New vehicle: $______o Used vehicle: $______ Know the Basics o VIN, Manufacturer, Make, Model, Year, and Type Things that you will need to do your research Vehicle Identification Number  VIN is a ____-character number  Where is it? o ______side of the dash o Inside of driver’s doorjamb o Vehicle’s title card  Information specific to the vehicle Manufacturer & Make Manufacturer:: The company that builds the car. The manufacturer builds makes of cars. Model  Specific type of make o Taurus (Ford) o Accord (Honda) o Altima (Nissan) o Corrola (Toyota)  The model year o Not necessarily the year it was ______Type  Pickups  Sport Utility Vehicles  Sport Utility Trucks  Compact Cars  Mid-size Cars  Full-size Cars  Mini-vans  Full-size Vans  Sports Cars

Where to go to research Sources to Compare Models  The person who does their research ______gets a good deal.  Online Sources: o Auto Manufacturers o Pricing sites o Consumer Reports o Fuel Economy sites o Safety sites Auto Manufacturer Websites  Good for: o ______Information o Models & Trim Levels o ______Pricing o Warranties o Dealership Locations o Search of Certified Used Cars  Main purpose of auto sites is to ______their own vehicles. Pricing Websites  Good for: o New-Car Retail Prices o Used-Car Retail Prices o Dealer Invoices o ______o Other Pricing Variables Consumer Reports  Consumer Reports: o Vehicle ______o Model Reviews o Reliability Ratings o ______o Safety Ratings  Subscribe online o 1 month ($5) or 1 year ($26) o Last ___ years of data www.fueleconomy.gov  Lists MPG for:  ______ Compare MPG for 4 models side by side  Customize an annual fuel estimate based on the cost of gas in your area, and the percentage of highway to city driving. Safety and Crash Tests  Insurance Institute for Highway Safety www.hwysafety.com  Tests and rates off-set frontal crashes: o Good o Acceptable o Marginal o Poor  National Highway Traffic Safety Administration www.safecar.gov  Tests and rates full-frontal & side impact crashes on a 5-star scale : o 5-star rating is the safest(*****) Cool Cars = Costly Repairs  Average Repair Bill is $______o Repairs Costs have increased ____% since 1992  2005 BMW 5 Series o Adaptive headlight $2,035 o Parking Sensor $372 o Adaptive Cruise Sensor $2,222

Step 2: Check out the Cars Where to Purchase a Car  Dealerships o Take your Time: only look at ______cars a day. o If you are tired at the end of the day, and just want to get it over with, a salesman will be able to sell you anything.  Other Sources: o Private-Party Sellers o ______Test Drive  Normal Travel Routes  Listen for ______ Drive variety of roads: o Windy o Bumpy o Steep  Drive for at least ___ minutes and ___ miles Types of Used Cars  Program Factory Cars o Fleet-leased (Rental) Cars that may have ______miles on it but they are still under warranty.  Certified Used Car o Certified cars come with warranties o Must past ______Check out a Used Car  Even if the car is a dealer-certified used car: o Get a ______report o Take the car to an independent mechanic for an unbiased, second opinion. . Cost: $______. ASC certified mechanics are best. Used Cars: Things to Check on the Exterior  Body Condition o Prior work will reveal paint and bolts  Glass  Paint  Rust or Damage  Tires Used Cars: Things to Check While the Car is on the Floor Under Hood  Oil Leaks  Water Pump Play  Battery & Connections  Belts, Hoses & Clamps  Radiator & Coolant  Carburetor Air Filter  Engine Oil  Power Steering, Pump Oil Safety Items  Lights  Horn  Windshield Wiper  Windshield Washer Used Cars: Things to Check While the Car is on the Lift  Brake Fluid Leaks  Exhaust System  Engine & Transmission Leaks  Rear Axle Leak  Frame or Structure Damage Suspension  Tie Rod Ends  Idler Arm  Shock Absorbers  Springs  Tires  Brakes (Front)  C.V. Boot Step 3: Get a Pre-Approval Step 3 – Get Pre-Approval  Know how much you can spend  Choose the best value  Shop for a car loan – the dealer is not usually the best place for financing. Step 4: Make An Offer Prepare to Deal Decide on your bottom line ______– avoid emotions/stick to facts Avoid High-balls and Low-balls Watch dealer add ons Making an Offer  Armed with research, you can make a firm and reasonable offer to the dealer.  A reasonable offer is 2% - 8% above the dealer’s cost.  Get the price in writing.  The salesman will sale you the car at your reasonable offer with hopes that they’ll make more profit with the financing and extras. Calculating a Reasonable Offer Dealer Invoice Price - Factory-to-Dealer Holdbacks - Factory-to-Dealer Incentives = Dealer Cost

Dealer Cost x 1.02 – 1.08 = Your Reasonable Offer