Download - Personal Finance Autos and You
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Personal FinanceAutos and You
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So You Want a Car, Huh?
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$249
Well, hey, only $249 a month!
I can afford that!
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Discussion Questions
What costs are associated with owning and operating a car?
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Costs of owning a car FIXED Initial purchase price Registration and title costs Sales tax Financing costs Depreciation Insurance Scheduled maintenance Storage (renting garage space)
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Costs of operating a car
VARIABLE Unscheduled repairs and
maintenance Gasoline Oil and other fluids Parking and tolls Tickets
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How Much Can You Afford? The 10% rule
– spend no more than 10% of your take home (net) pay on a car payment
If you make $2000 a month, try to find a car payment of $200 at the most
Work with a budget
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Before Buying a Car
Narrow your choices Research and compare Credit Pre-approval Visit Dealers Test/Inspect
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Price Bargaining Schemes
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Discussion Questions
What’s better NEW or USED? Compare the Advantages and
Disadvantages of New/Used Cars– Come up with 3 Pros and 3 Cons for
each
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ANALYZE:NEW and USED Cars NEW CARS USED CARSPROS CONS PROS CONS
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Places to Buy a Car
From a dealer From a private party From an auction Others?
– Internet?– Using the internet as a research tool
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A used car from a dealer
Consider costs, reliability, dealer reputation
Read the "Buyer's Guide" sticker Consider the warranty and the
service contract What to do if you have problems?
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A used car from a private party No warranty Cost less than from a dealer Make sure you get the TITLE. A TITLE proves ownership of the
car
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5 Tips When Looking at Used Cars Check Body Condition Check Odometer Consider Mileage Get a Mechanic to Check the Car Get Registration and Title before
you buy
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Electrical
Shock Absorbers
Tires
Brake Shoes and Lining
Suspension Arm
Steering Wheel
Exhaust Pipe
Engine
Radiator
Lights
IDENTIYFING PROBLEM AREAS IN USED CARS Muffler
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THINK: What should a test drive include? Drive on bumpy roads, freeways, etc Run in all gears Test brakes Start the car several times Listen for strange noises Park the car on a clean surface and check for
drips Check lights, windows, radio,heater, A/C, etc.
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A new car
Read about new car features and prices
Shop around Plan to negotiate price Learn the terms Consider the service contract
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Types of warranties
As-is warranty Implied warranty Dealer warranty Manufacturer's warranty
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Service contracts
Preventing problems Resolving disputes Comparing promises of warranties
and service contracts
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AUTO INSURANCE
Why do you need it?– Required by Law– Good Idea in case you get in a wreck
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How are insurance rates set?
Age Sex Marital status Personal habits
(e.g., smoking) Type of use Frequency of use Location
Driving record deductible Type of car Value and age of
car Type of coverage Type of car Grades
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DEDUCTIBLES Usually either $500 or $250 Deductible
– The amount you pay after a Claim is filed– example: You back into a tree and do
$650 in damages.• Your deductible is $250, then the insurance
company pays you $400• Your deductible is $500, then the insurance
company pays you $150
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DEDUCTIBLES (cont)
So why would you ever want a $500 deductible?
Accident free discounts– You may not even want to file a claim.– Keeps insurance rates down.
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Types of coverage Bodily injury liability Property damage liability Collision Comprehensive Medical payments Uninsured motorist Rental reimbursement Towing and labor
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WHAT IS THE CAR WORTH? New Cars
– MSRP• Sticker Price / Retail Price
– INVOICE PRICE• The Price the Dealer Pays
– Your goal? To get as close to the invoice price as you can!
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Dealer Tricks
Highballing Lowballing Talk to the Manager Bait and Switch The Waiting Game Good Guy / Bad Guy