Purchasing a Vehicle

Buy or Lease• How much wear and tear you plan to

put on the vehicle?• How much will you drive the vehicle?– (12,000 to 15,000 per year)

• How long do you want to keep the vehicle?

• Monthly lease payment are usually lower than monthly loan payments. But may be additional costs at the end of a lease.

Buying

• Make a down payment– Typically 10% of the vehicle’s value– If you have bad credit, you may be required to pay

a larger percentage– The larger the down payment, the less money you

have to borrow.– The value of a trade in counts towards the down

payment

Buying

• Loans– Shop for the lowest interest rate– A low interest rate over a long

period of time may cost you more than a higher interest rate over a shorter period of time.

– Before you sign anything, be sure to understand ALL the repayment terms and what you will owe

Buying

• Monthly payments– Amount depends on the down

payment– The payments remain the same

for the length of the loan– The amount that goes towards

the interest gradually decrease and the amount towards the principle will increase

Buying

• The lender is the owner of the vehicle and keeps the title– Title: legal document that

shows who owns the vehicle

Leasing• Leasing: make monthly payments in exchange

for exclusive us of the vehicle for a specific period of time.– You do not own the vehicle.

• Leases are only for new vehicles

Leasing

• Up-front costs– First month’s payment must be made when

signing the lease– Other Up-front costs• Refundable security deposit• Taxes• Registration fees• Acquisition fees• Capitalized Cost Reduction: like a down payment the

results in lower monthly payments

Leasing

• Monthly Payments– Lessee pays for the vehicle’s depreciation– Interest to leasing company in return for use of

the vehicle

Leasing

• End-of-lease costs– Disposing fee– Charges for • exceeding mileage limit• Significant wear and tear

• Ending the lease early– Considerable penalty fee

Vehicle Maintenance

Maintenance Schedule • Owners manual contain

a time table for routine servicing

• You should put aside money for serving and maintaining your vehicle

Items to check regularly

1. Windshield washer fluid2. Engine oil3. Transmission fluid4. Brake fluid5. Tire pressure6. Radiator coolant7. Lights8. Battery

Service facilities

• Dealerships• Service stations• Specialty centers– Muffler, brakes, transmissions, etc

• If the car is under a warranty, take it to the dealership

Maintenance Costs• Get an estimate– Shops cannot exceed the estimate without your

permission• Replacement parts– Rebuilt/reconditioned parts• Cheaper• But may void warranty

Maintenance Costs

• Recall– Manufacturer’s request for

owners to take their vehicle to a dealership for repair

– Usually a safety reason– Manufacture usually pays for

everything– Recall notices are usually

mailed directly to owners

Responsible Driving

• Know and obey traffic rules• Stay focused on driving– Cell phone, etc

• Stay alert• Buckle up– Young children rid in safety seats

• Drive smoothly– Sudden stops and starts waste

fuel – Cause wear and tear

Auto Insurance.

Auto Insurance Systems• Traditional Fault System– Insurance companies pay claim

according to each person’s degree of fault or responsibility for causing the accident

– Can result in costly court cases• No-fault Insurance System– No fault or blame is assigned– Limits the rights to sue other

drivers

Types of Coverage

• Collision Coverage– Pays for the repair or replacement of your own vehicle– Usually, the insurance companies will pay

no more than the current value of the vehicle (depreciation) minus the deductable• Deductable: set amount an insured person

must pay per loss before the insurer will pay benefits• Totaled: damage beyond reasonable repair.

Types of Coverage• Comprehensive Physical

Damage Coverage– Protects your vehicle against risks unrelated to traffic accidents• Fire, hail, theft, vandalism

• Liability Coverage– Covers injury or damage to other

people or their property– Required by most states

Types of Coverage• Medical Payment Coverage– Pays for immediate and short

term medical treatment costs– Usually covers passengers in

your vehicle too• Personal Injury Protection– Covers medical expensives– Also covers lost wages,

rehabilitation, nursing home

Types of Coverage• Uninsured Motorists Coverage– Hit and run– Some else causes the accident and

does not have insurance– Other driver has too little insurance

• Other Types of Coverage– Roadside assistance, towing, rental car,

• Affected by…• Age• Gender• Marital status• Driving record

• Type and age of vehicle• Vehicle use• Place of residence• Number of drivers

on the policy

Auto Insurance Rate

In Case of an Accident• Safety first• Call the police is property

damage, a person is or a law appeared to be broken

• Don’t discuss the accident details to anyone except a police officer

• Call insurance company – They will help with procedures!

In Case of an Accident• Exchange information– Name– Insurance company– Policy number– Driver’s license number– Name of owner of the vehicle– License plate number– Vin number– Witness names and phone numbers