Major Life Purchases: Buying a Car

Why Buy a Car?

· ______

· Increases your options:

o Where you ______

What Does it Take to Buy a Car?

· ______

· ______skills

· Patience

· Requires knowledge of consumer rights

· ______Costs & Knowledge of how to maintain

Costs of Buying and Owning a Car

Buying a Car

· ______

· License (every year)

· Sales Tax

· Financing Costs

· Depreciation (biggest cost)

· ______

· Accessories

Costs of operating a Car

· ______

· Oil and other fluids

· ______

· 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

Do I really ______this item?
Is it worth the time I spend making the money to buy it?
Is there a better use for my money right now?

Questions to decide on the right purchase.

What level of quality do I ______?
What level of quality do I ______?
What types of service and repairs does the dealer offer?
Should I wait until there is a ______on the type of car I want?
Should I buy a ______or ______car?
If I buy a used car, should I buy it from a dealer or from a private party?
Should I choose a car with a well-known name even if it costs more?
Do I know anyone who owns the type of car I want?
Are the warranty and the service contracts on the car comparable with warranties and service contracts on similar cars?
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 FloorUnder 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