OBJECTIVE 6.00UNDERSTAND SHOPPING OPTIONS AND PRACTICES FOR MEETING CONSUMER NEEDS.

6.02A STUDENTS WILL UNDERSTAND OPTIONS AND PRACTICES FOR MEETING TRANSPORTATION NEEDS.

6.02 ESSENTIAL QUESTIONS

What are the options for meeting transportation needs?

How can consumers make wise decisions when shopping for transportation needs? Setting priorities Doing the research Leasing/purchasing vehicle Obtaining insurance

DECISION MAKING TIME:STEPS IN MEETING

TRANSPORTATION NEEDS

1. Consider options for transportation needs

2. Set priorities

3. Do the research

4. Make decision

5. Implement

6. Evaluate

STEP 1. CONSIDER OPTIONS FOR

TRANSPORTATION NEEDS Public transit

Taxicabs

Walking, bicycling

Motorcycle, moped

Carpooling

Purchase/Lease of a vehicle

Which options are available in your area?

Which options fit your personal needs in short term or long term?

Which options are within your budget?

STEP 1. CONSIDER OPTIONS FOR

TRANSPORTATION NEEDS Public transit

Widely available in cities, costs less than owning a vehicle, no responsibilities

Taxicabs Convenient, but very costly; may be difficult to find in some situations

Walking, bicycling Economical choice for short distances; less protection in foul weather

STEP 1. CONSIDER TRANSPORTATION OPTIONS

Motorcycle, Moped

Convenient, less expensive to buy and operate, conserves energy, requires less parking area, easy to maneuver, high accident/injury rate, especially on major highways or in heavy traffic

Carpooling

Economical when convenient, saves energy, parking problems, reduces traffic, requires some rearrangement of personal schedule

Purchase/Lease of Vehicle

Convenient, costs more in energy, required parking, heavier traffic, maintenance costs, insurance expenses, property taxes, investment

OUR AREA Since the community we live in has limited

opportunities for public transportation, taxi services, & walking opportunities, we will primarily deal with leasing or purchasing a private passenger vehicle.

VEHICLE PURCHASE/LEASESTEP 2-SET PRIORITIES

Make a list of wants and needs for a vehicle

Take into consideration:

Who will be driving the vehicle?

What you can afford?

When and where it will be used?

Whether to purchase an automobile, truck, motorcycle, or van

STEP 3. DO THE RESEARCH

Research Used vs. New vehicles

Used vehicle---one-to-two-year-old (late model year) vehicle is often good option for first-time buyers because:

Initial cost fits budget needs

Depreciates (loses value) more slowly and costs less to insure

May have “Buyers Guide” sticker on window – check it out!

May still have factory/dealer warranty; Look for one-to-two-year-old vehicle ; others have no warranty

STEP 3. DO THE RESEARCHUSED CARS

How can I know it is a “good” used car?

1. Look out for defects-disclosure sheet- describes repairs/replacements done; if car has been in an accident- may need to have vehicle inspected by an independent technician

2. Ask about previous owner and maintenance records

3. Research performance, safety & service records for make & model on internet

4. Superstores, dealers and manufacturers sell “certified used cars”-have received thorough mechanical and appearance inspections, & necessary repairs and replacements

5. Check Official Used Car Guide and NADA Kelly Blue Book for info on used vehicles

STEP 3. DO THE RESEARCH

Used vs. New vehicles New vehicle---the challenge is to find a

vehicle to match one’s needs, wants, and budget

Advantages of choosing new car….

Choice of features for safety, performance , economy, appearance & convenience

Choose between domestic and foreign made

Standard features at no extra charge

Extra features add significantly to cost

Custom vehicles can be ordered from factory

STEP 3. DO THE RESEARCH

Where to buy Traditional dealership-represents one or two manufacturers,

selling new and/or used

Have support of dealership

Auto superstores sell new & used vehicles

Huge inventories of new and used vehicles

Private sellers, classified ads, & auctions

sell “AS IS”

no warranty

STEP 3. DO THE RESEARCH

Research makes and models What are important factors to consider?

1. Safety- brakes, airbags, head restraints

2. Reliability-check consumer magazines and Internet for quality and reliability marks

3. Fuel economy-type of fuel used and miles per gallon

4. Power & performance-acceleration, handling, braking, & acceleration

5. Comfort & convenience-headroom, legroom, & storage for cargo

6. Insurance-rates vary according to data tables on repair costs of various models

7. Warranties-generally provide for repair/replacement of defective parts during warranty period

HOW TO COMPARE MPG

New Vehicles- vehicle specific information required by the EPA

Used Vehicles- general information on internet, but may not be the exact model with features, not required by EPA

http://www.fueleconomy.gov/feg/printguides.shtml

Actual mileage will vary with options, driving conditions, driving habits, and vehicle condition

STEP 3. DO THE RESEARCH

Research prices Used vehicles---book value is the estimated value of a

given make, model and model year

New vehicles---types of prices *Invoice price-price the dealer pays the manufacturer

*Base price- the price of a vehicle with standard equipment

*Options and option package-features available at extra cost

*MSRP – (Manufacturers Suggested Retail Price)

base price +price options installed by manufacturer+

*Sticker price-dealer’s initial asking price as found on the sticker on the window

Research options for financing Lease term- length of contract, usually

24, 36 or 48 months

Up front costs-made when signing lease---includes deposit, taxes, and registration fees

Residual value*-worth of vehicle end of lease; higher residual = lower payments

Monthly lease payments-made by lessee-pays for vehicle depreciation during lease

Interest- generally lower than when buying

At End of Lease

Disadvantage: No asset value in vehicle because you have only been renting

Written into contract:

Disadvantage: End-of-lease costs cover reduced value of vehicle, excess mileage, penalties for ending lease early, significant wear & tear

Option to purchase at end of lease or to extend lease (usually at *residual value)

video link: leasing basics

Leasing: monthly payments in exchange for exclusive use of vehicle for a specified period of time; (like renting an apartment)

STEP 3. DO THE RESEARCHLEASING VS. PURCHASING

video link- leasing benefits

Purchasing---buyer pays cash or takes out a loan and pays for the vehicle with monthly payments---costs more than paying cash because includes interest on amount borrowed

Paying cash from savings

Dealer financing---easy, on-the-spot source

Get separate quotes for car and for financing

Check financing terms at other sources

Check online for rates and terms

Dealer holds title until paid (collateral)

Bank (Credit Union, Financial Institution) Financing

Get separate consumer loan for vehicle

Pay back in installments

Either option may include trading in another vehicle for part of price

Installment loans-regular – repay in monthly payments of approximately same $ until loan paid in full

Secured at banks, credit unions, finance companies, savings & loans

Lender holds title until paid in full

Variables affecting loan:

Length of time to repay (T)Time

Annual percentage rate (R)Rate

Amount of $ borrowed(P) Principle

Review Simple Interest Formula_

I = P R T

STEP 3. DO THE RESEARCHLEASING VS. PURCHASING

O B TA I N AU T O M O B I L E I N S U R A N C E

Types of auto insurance available Liability insurance covers driver’s responsibility toward other people (when at fault)

Bodily injury liability -covers others when other people are injured or killed

Property damage liability- covers when other people’s property of others is damaged

Collision-pays for loss/damages to insured person’s vehicle due to AT FAULT accident

Comprehensive physical damage- pays for losses due to fire, theft, vandalism, falling objects, hail, windstorm, flood, impact with wild animal

Medical payments- Pays insured’s medical expenses resulting from accident

Uninsured/Underinsured motorist- Protects against driver who causes accident, but does not carry insurance or has low limits of insurance coverage

Rental reimbursement- Costs of renting a car while yours is being repaired

Towing & Labor – Costs of labor & towing a vehicle broken down or wrecked

Liability Insurance is Required by NC law

http://www.griffithfoundation.org/uploads/classroom.wmv

The basic concept of insurance

VEHICLE INSURANCE

No-fault auto insurance pays claims regardless of who is at fault

NOT AVAILABLE IN NORTH CAROLINA

WHAT HAPPENS TO YOUR INSURANCE WHEN YOU FILE A CLAIM?

Review Previous slide for or

means points are NOT charged on your insurance

means points apply to your insurance if there is claim on this coverage

Which insurance coverage is required by North Carolina law?

Bodily injury Liability

Property damage Liability

What happens if you do not have this insurance?

Surrender your license tag, pay fine, may impound vehicle

What if you are in an accident and the “at fault” party does not have this coverage?

Your Uninsured Motorist pays for your damages or injuries.

BODILY INJURY LIABILITY COVERAGE

If you are AT FAULT and there are damages, you are LIABLE to pay for the injuries you cause. Both bodily injury liability & property damage

liability charge points!

Bodily Injury Liability protects the insured person from liability claims for injury to: People in other cars

Passengers riding with the insured person

DOES NOT cover the insured person (driver)

Liability Insurance is Required by NC law

PROPERTY DAMAGE LIABILITY COVERAGE

Property Damage Liability protects the insured person from liability claims for damage to property of others, such as: Personal property including vehicles, animals

Business property including telephone poles and other utility structures

Government property such as bridges, signs, and other road structures

Real property (land & permanent attachments)

Does NOT cover the insured person’s property

Liability Insurance is Required by NC law

OPTIONAL AUTO COVERAGE-COLLISION

If you are AT FAULT in an accident and your vehicle is damaged, file a collision claim.

Collision covers the cost of repair to insured’s vehicle!

Protects the vehicle owner against damage from a collision with another object or the vehicle turning over

Charges points to insurance

Points make premiums increase

Does NOT cover injuries to people

Usually required by creditor if there is a loan

OPTIONAL AUTO COVERAGE-COLLISION

Although not required by financial responsibility law, collision is Usually required by a lienholder if loan on vehicle is not

paid in full

A lienholder is a bank, individual or loan company who holds a secured interest in the property until the loan is paid in full.

Example: If car catches fire and loan is still outstanding, the claim dollars are paid to insured and lienholder.

COMPREHENSIVE AUTO INSURANCE

Protects the insured vehicle against damage from almost all damages except collision Fire

Theft

Vandalism

Hail

Windstorm

Windshield damages

Collision with wild animal including fowls

Does NOT charge points when claim is filed

Usually required by creditor if there is a loan

UNINSURED/UNDERINSURED MOTORIST COVERAGE

Protects policyholder against drivers Without insurance insurance to cover the loss

suffered

Without enough insurance to cover the loss suffered

Examples: Hit and run drivers

Drivers who let insurance policy lapse and cause an accident

Drivers involved in serious accidents who carry low $ liability limits of coverage

OTHER AUTO COVERAGE

Medical payments - Covers anyone in vehicle or hurt by vehicle, even if not moving

Ex: Broken finger by closing finger in door or trunk, pedestrians

Towing Expense - Pays tow fees

Rental Reimbursement - Covers cost of rental when vehicle being repaired due to accident

FACTORS IMPACTING VEHICLE INSURANCE PREMIUM COSTS

$ limit on amount of coverage – the more you buy, the higher the premium

Driver classification – experience, marital status of driver

Driving record and habits---high-risk drivers premiums are higher

State of residence

Number of cars insured

Cost of vehicle---higher rates for luxury/hot cars

Whether young driver has completed a driver’s education course

Amount of deductible for comprehensive & collision coverages---amount insured pays before insurance company pays on claim

AUTO CLAIMS

The at fault driver of a vehicle that damages other property or injures other people is liable for the cost of repairs.

In a one car accident…you are at fault!

Hitting a bridge, tree, ditch, etc.

North Carolina financial responsibility laws mandate that drivers carry bodily injury and property liability insurance coverage.

Financially protects the NOT at fault party from someone causing an accident

COST OF INSURANCE

Insurance companies legally discriminate by using: Relevant statistical data and

Risk factors related to the insurance type

Underwriters at companies “rate” to determine the premium cost for the coverage requested. Standard premiums may be rated up for hazards/risks

Points for tickets or accidents on auto insurance

Health issues on life/health insurance

FACTORS AFFECTING COST OF AUTO INSURANCE

Type of coverage $ Limit of coverage Risk retention -Deductible amount Experience rating – how long driver has been licensed (AGE IS

NOT A FACTOR!!) At fault Accidents (Points) Tickets (Points) Type of Vehicle - Value, repairability, engine size, style, HOT Geographic area- Urban, suburban, rural Use of Vehicle - Distances driven and purpose

pleasure only, <10 miles to work, >10 miles to work, business use

Company

video link: auto insurance basics

video link: tips on buying auto insurance

WHAT IF YOU BUY A DEFECTIVE VEHICLE?

www.autopedia.com/#lemonlaw

http://www.ncdoj.com/Consumer/Automobiles.aspx

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