purchasing a car: lesson 1 coach markus. essential questions 1. should i buy a new car or a used...

Purchasing a Car: Lesson 1Coach Markus

Essential Questions1. Should I buy a new car or a used car?2. Where can I find the best car loan to

finance my purchase?

Video InterludeFunny Money Guy: Buying a Car

Objectives Identify costs of owning and operating a car. Identify factors to consider when shopping

for a car. Identify factors to consider when shopping

for a car loan and car insurance. Determine how much money can safely be

spent each month to own, operate, and maintain a car within a given budget.

Costs of owning a carOwnership:

Purchase Price Sales Tax Registration, title, and license Financing costs Insurance

Costs of owning a carOperational:

Gasoline Oil and other fluids Tires Maintenance and repairs Parking and tolls

Decisions, DecisionsWhen purchasing a car, many decisions will need to be taken into consideration.

QualityWhat level of quality do I want?

What level of quality do I need?

CostHow much do I want to spend?

Car ModelShould I choose a car with a well-known name even if it costs more?

ResearchWhat do consumer magazines say about the kind of car I want?

RecommendationsDo I know someone who owns the kind of car I want?

TimingShould I wait until there’s a sale on the kind of car I want?Should I wait until interest rates drop?

New or UsedWhat is the difference?Have I weighed my options?

Where to buyPrivate dealer or private party?

Before you SHOPWhich car model and options do I want?

Before you SHOPWhat is the invoice price? What is the true cost to the dealer?

Before you SHOPHow much am I willing to pay the dealer above the invoice price?

Before you SHOPWhat is the value of my present car that I will be trading in?

Before you BUYTake the car for a test drive.

Before you BUYMake your offer to as many dealerships as possible.Compare final sales prices and buying services.

Before you BUYCompare financing costs.

Before you BUYTry to sell your old car yourself. Why?- Dealers give better deals with no trade-

in- Dealers will not give you as much for

your car

Before you BUYConsider if you need an optional (extended) service contract.

Car buying realities- How much can I AFFORD to spend?- Is there a shop nearby that works on my

car?- Are parts readily available for my car?- What kind of financing will I qualify for?- Do I know how to read a buyers guide

sticker?

Buyers Guide “Sticker”

USED car purchasingIf you are buying from a dealer, know the reputation of the dealership.

USED car purchasingWhat type of warranty, if any, comes with the car?

USED car purchasingKnow what type of service contract, if any, comes with the car.

USED car purchasingDo you know the maintenance or accident history of the car?www.carfax.com

USED car purchasingTake the car for a test drive, or multiple drives in different conditions.

USED car purchasingHave the car inspected by an independent service maintenance person. Especially if buying from a private party.

Used Car SourcesNew-car dealers:

Provide quality used vehicles Have a service department available Ask higher prices than other sources

Used Car SourcesUsed car dealers:

Specialize in previously owned vehicles Offer only limited warranties (if any) May sell vehicles in poor condition Can have shady reputations

Used Car SourcesPrivate Parties:

Can offer a good buy if the vehicle was well maintained

Offer little consumer protection Can be awkward if the car has a lot of

issues

Used Car SourcesOther sources:

Auctions (Government or private) Rental companies Internet (E-bay, etc.)

Kelley Blue Book (KBB)www.kbb.com

How many prices are there?? List price/Retail price/Sticker price:

Asking price by the dealer. Sometimes negotiable.

Invoice Price/Dealer Invoice price: The price the dealer paid the manufacturer for the car.

Base Price: The price of the car before options.

Book Value: Pricing book prices (KBB is most popular)

WarrantiesWhat is a warranty?A written guarantee to make needed repairs on a car within a limited period of time.

WarrantiesAs-is (no warranty): If you buy a car and have problems with it, you must pay for this yourself. On most used cars, unless the

dealership has a limited warranty plan.

WarrantiesDealer warranties: Offered and specifically written by the dealer. Terms and conditions can vary greatly, so it is useful to compare warranty terms on similar cars or negotiate warranty coverage.

WarrantiesManufacturers warranties (unexpired): The manufacturers warranty can sometimes be transferred to the new owner.

Manufacturers warranties usually are for 36,000 miles or 3 years, whichever comes first. Some are more, depending on brand.

WarrantiesService contract (Extended Warranty):Goes into effect after the manufacturers warranty expires. Designed to avoid costly repairs as a motor vehicle gets older.

Service Contract Cost Coverage Deductible Limited to a certain dealership Towing coverage Cancellation or refund policy Reputation of warranty company Cost of purchasing later

Quiz