buying a car
TRANSCRIPT
Adding a new car to your household
Topics covered
Decision Making Process
Get Finanically prepared
Questions about process of buying a car:
Matthew Fryer. Autoproxy
What is the problem
NEEDS
To be within her price range
Easy to maintain
Needs to last her atleast 5 years
Car that is fuel efficent
WANTS
To have a car that is cute and she looks good in
She wants a great sounds system
She likes heated seats
She would like a hatchback or a small compact car
Financial preparednessUnderstand the costs of having a car
What do you do with your existing car
Budget
Get ready for the monthly payment
Know how much it cost to have the car
ownership (fixed) costs:
Depreciation (based on purchase price) Interest on loan (if buying on credit)
Insurance
Registration fee, license, taxes, GST
Service contract (if purchased) operating (variable) cost
OPERATING THE CAR(VARIABLE)
operating (variable) costs:
Gasoline Oil and other fluids
Tires
Maintenance and repairs
Parking and tolls
Tickets
FIXED COSTS
What to do with your existing car
Leasing or Buy?
Smaller initial outlay than down payment when buying on credit
How much can you spend
Meet Rose Rose is a college student. She has just started to go to school she is working part time(20 hours a month) and going to school. She wants her car to last her for the next 4 years of university and the first year while working. Once she has been working for a bit, she wants to save before buying another car..
Rose wants to buy a car
She has $1,000 saved for a down payment.
Rose makes 1300 each month
Fixed cost (rent and credit payments): 324
Flexible costs (Savings and day to day costs) each month 559
She currently does not have a car. She takes the bus for transportation $165
Extra money to pay for emergency $50 aside each month
How much extra money does Rose have
SALARY
Monthly salary 1300
Yearly salary 15,600
EXTRA MONEY
$202 left to play with(1300-324-559-165-50
New Car expenses$60 gas and oil per month
$30 parking and bridges per month
$175 Car insurance
Total additional cost added for having this car per year
$1255
Getting a loan: get prepared
Why get a loan
ADVANTAGES
Able to buy needed items now
Don’t have to carry cash
Creates a record of purchases
More convenient than writing cheques
Consolidates bills into one payment
Emergencies
DISADVANTAGES
Interest (higher cost of items)
May require additional fees
Financial difficulties may arise if one loses
track of how much has been spent each month
Increased impulse buying may occur
Rule for Credit
20% RULE
never borrow more than 20% of your yearly net income 0 Rule
10% RULE
monthly payments shouldn’t exceed 10% of your monthly net income:
Meet Rose Rose is a college student. She has just started to go to school she is working part time and going to school. She wants her car to last her for the next 4 years of university and the first year while working. Once she has been working for a bit, she wants to save before buying another car.
Rose wants to buy a car
She has $1,000 saved for a down payment.
Rose makes 1300 each month
Fixed cost (rent and credit payments): 324
Flexible costs (Savings and day to day costs) each month 559
She currently does not have a car. She takes the bus for transportation
Extra money to pay for emergency $100 aside each month
RoseHow much loan can Rose get as a loan
Salary 1300x12=$15,600
20% $3,120
Rose
Monthly payment $1300
10% 130 each month
Plan ahead
$50 dollars each month
1 year: 600
2 year 1200
3 year 1800
What impacts your credit score
What factors play into your credit score
Character
Capacity
Capital
Getting a loanINCORRECT
CORRECT
HOW DOES MY CAR LOAN TERM LENGTH AFFECT MY INTEREST CHARGES?
How to get a good credit score
Steps for Buying a Car
Step 1. Do your homeworkStep 2. Test drive the carStep 3. Consider your optionsStep 4. Check the price guides* Second test driveStep 5. Negotiate
Thank You