Buying a Car: The Need to KnowDoug Martin, Taylor Meyer, and Matt SpanovichMarch 6, 2012

Taylor Meyer

Selecting the Appropriate Vehicle

Recognize the Need

• Purpose• School• Job• Parents had lent you a car• Family

• New Car vs. Repair

The Car to Fit Your Lifestyle

• Work involving construction, farming, transporting materials, or driving over rough terrain

• Truck• Jeep• Land Rover• Hummer

The Mid-Size Vehicle

• Consider if one has a large family, provides carpooling or other transportation, or if one is a small business owner

• Minivan• SUV• Full Size Van

The Car

• Ideal for the small family, business travel, the desire for a fast vehicle, look of the car, or better handling and gas mileage

• Sedan• Luxury Car• Sports Car

Fuel Efficiency

• Smart Car• Fiat• Hybrid• Car• SUV

Matthew Spanovich

The Budget

Personal Finance

• Examine one’s personal financial position

• Calculate expenses• Gasoline• Unexpected car

maintenance

• Utilize financial calculators to determine budget and price range

Taylor Meyer

Researching the Market

Research

• Car in Mind• Internet• Research the Brand• Websites• Kelley Blue Book• Consumer Reports• Car and Drive• Auto Zone

• CarFax

Research

• Print Source• In-Depth Analysis• Creditable Sources

• Quality Sources include:• Consumer Report• Car and Driver• Motor Trend• Auto Guide• Sunday Newspaper

Other Forms of Research

• In-Person Research• Dealerships’ Deals• Feel out the Car• Ask for the CarFax• Recall History

Doug Martin

Dealing with the Dealership

Those TV Commercials

Before the Dealership

• Research, Research, Research• Kelley Blue Book

• Get financed before you shop

Walking into the Dealership

• You are the ultimate deal breaker• Sticker price vs. Price you should pay• NEVER impulse buy

Showroom Anxiety

• Bring someone with you• “Forget” payment options• Make the decision over multiple days, even

weeks

The Test Drive

• Do not drive anything you are not considering buying

• Check all major systems• Diagnostics check

• Overall convenience and comfort

The 4 Square

Trade Value

• Dealers will get you on the defensive

• Do not settle for anything less than what you want

Car Price

• Sticker price vs. Price you pay

• Understand you will be paying for more than the cost of the car

Down Payment

• Wiggle Room

• If you give, the salesman should as well

Monthly Payment

• Affordable

• Do not overlook a 10-20 dollar increase

The Contract

Matthew Spanovich

Finding the Right Financing

Leasing vs. Buying

• Do you want to own the vehicle, or rent it?• Do you want to upgrade your vehicle every few

years?

Leasing

• Benefits:• Down Payment and Monthly Payments• Upgrading your car• Bank Loans

• Drawbacks:• Car Rental• Mileage and other restrictions• Higher insurance costs

• Closed-end vs. Open-end

Buying

• Benefits:• Owning the vehicle• Free of restrictions and penalties• Insurance rates

• Drawbacks:• Down-payment and monthly payments• Risk of an upside-down loan

Dealership vs. Institution Financing

• Where can one find the best loan rates?

• Which method requires less hassle?

Dealership Financing

• Most simplistic approach

• Most expensive approach

• Back-End Business Scheme• Dealerships receive big bonuses for signing buyers to

higher interest rates• The dealership may not have your best interest in mind

Institution Financing

• Shop around• Start with one’s personal bank• Other banks• Other lenders

• Negotiate all the details, but do not sign• Go to the dealership with this knowledge

Paying Cash

• Eliminate monthly payments• Interest and finance fees

• Easier to sell the car later on

• Do not empty your savings• Leave yourself a rainy day fund

Down-Payment and Loan Terms

• At least a 10% down-payment on an old car• At least a 20% down-payment on newer cars

• Increasing your down-payment can significantly reduce the overall cost of the car

Rebate or Dealer Financing

• Dealers make you pick one of the two

• The low interest rates typically only apply to older, slower-moving models

• Generally, dealer rebates pay off more

Conclusion

• Conclusion

• Any Questions?