How Will You Get There?

How Will You Get There?Chapter 121Here to there history of transporation

2:332Transportation BasicsTransportation and SocietyWhen Do You Use Transportation?Local, State, and Federal Transportation OfficesTransportation OptionsIndividual TranspirationPublic TransportationCostConvenienceSpeedEnvironmental BenefitsCarpooling

Transportation and SocietyAmericans travel more than people in any other nationMore than 10 million commercial passenger flights take off in the US each year.

When Do Your Use Transportation?Studies show that more than 90% of the trips Americans take are less than 10 miles long.school, work, store, visit friends, eat

Local, State and Federal Transportation OfficesMonitor the use and condition of travel and transportationMaintenance traffic signals, remove snow from roadways, fix potholes

Transportations OptionsIndividual TransportationBicycle (more than$1 billion a year spent on bikes) In-line skatesMotorcycles can be as expensive to insure as a car (statistically you have more than 3 times the chance of being seriously injured while driving a motorcycle than while driving a car), must have a special license to drive, Safety equipment helmet (more than 65,000 people are injured in bicycle accidents each year with 1,000 resulting in death and it is estimated that 1/3 of those deaths could have been prevented with a helmet), for in-line skates and bicycles you should consider knee and elbow pads and for motorcycles boots, long pants and a jacket.

Public TransportationBuses, streetcars, subways, trains, ferries, and taxisAdvantages over owning a car:Cost inexpensive pay only when you use it, no gas or repair costs, no paying to parkConvenience no preparation and/or hassle to warm up, gas up, parkSpeed no traffic jams, many cities even have bus lanes that will keep moving even when traffic is stoppedEnvironmental - less emissions

Things to think about:You must plan ahead bus/train schedule, calling a cab, last stop and/or runTaxis are the most expensive form of public transportation you pay by mile (1/10 a mile) and should tip

Car PoolingAn arrangement to share private transportation. Reduces cost and is social, good for the environment. Some cities offer carpooling lanes3Can You Afford a Car?Trade OffsThe nicer the car the more it will costThe price of your payments determines how much you have to spend on other thingsHow Much should you spend?Payments should be no more than 20% of your take home pay (provided everything else in your budget is in proper proportion)

Should You buy a car?Should You Buy a Car?A car or truck is the second most expensive purchase most American make, next to a home.

Cost of a vehicle is the purchase price, insurance, gas oil, maintenance, parking, and other things.

Can You Afford a Car?According to Forbes.com 2014, the average new car costs $30,300. With $4,000 down payment you would need to finance $36,300. $36,300 for 60 months (5 years) * 3.12% would make you a car payment of $473.98. (bankrate.com)

To decide if you can afford this car or not, you 1st would check to make sure it is not more than 20% of your take home pay, then you would add up all your monthly expenses and subtract them from your take home pay. Dont forget to make sure your expenses include extra costs of the car including gas, maintenance and parking. If both of these work and you are not too tight, you can assume you can afford this vehicle.

410 Stats about car buying

1:315New car or used car?ReliabilityNew Less chance of breakdown, more likely any repairs needed will be covered by warrantyUsed More chance of breakdown, less likely to have a warranty, repair costs could be highCostNew Higher initial price and largest depreciationhttp://www.money-zine.com/calculators/auto-loan-calculators/car-depreciation-calculator/Used Lower initial cost, less depreciation, higher repair costs possibleMileage Odometer Instrument in a car that measures miles traveledNew zero to few miles for better resale value and warranty usageUsed higher miles means less trade in and more usage of parts that are subject to wearHow to evaluate a used car

http://www.money-zine.com/calculators/auto-loan-calculators/car-depreciation-calculator/

New or Used Car?Reliability New cars generally have fewer mechanical problems than used cars and if it does have problems, it will more than likely be covered under a warranty. Some used car dealers offer warranties also, but you wont get one if you buy a used car from an individual. If you choose a used car that ends up needing several repairs and/or replacement parts it could end up costing more in the long run than if you had just bought the same car new.

Cost Studies have shown that most cars lose 25% of their value each year so if you bought anew car for $20,000, it would be worth only $15,000 the next year. This may make it worth buying a 1 or 2 year old car used.

How to Evaluate a Used CarMore than 2/3 of cars sold each year are used. Every used car whether purchased from a dealer or individual should be evaluated:- mismatched paint or external panels that dont fit quite right.- Rust (look inside doors and under carpets)- Upholstery stains and moldy smell- Look on the ground for fluid drips- Check all controls and lights- Check alignment by driving slow on a flat surface and checking for pull)- Check brakes by stepping on firmly and checking for pull- Check that gears change smoothly without grinding or slipping- Look for blue smoke at the tailpipe when you let off the accelerator (blue smoke indicates burning oil)- Pull the dipstick when the car is running it should be red with no burn smell or bubbles

6How to choose a carWhat Class of Car?Economy, Midsized, Full-sized, Luxury, Sport Utility, Van, Sports Car, TruckDetermine how you will use the vehicle to choose the best size for your needsWhich Model?2-door, 4-door, hatch back, sliding door, manual/automaticFeatures and OptionsFeatures Characteristics of a particular model of car that offer benefits to the ownerPower windows, automatic transmission, rear wiper bladeOptions Features that you can choose to include or not include on a car, but if chosen, will add to the price of the carHeated seats, sun roof, custom paint color, XM radio, cruise controlDealer Add-Ons Installed at the dealership and charged to the customer, usually at inflated pricesRust proofing, paint sealer, upholstery treatmentExtended WarrantyTypical new car warranty is 3 years or 36,000 miles but you can buy moreSafety FeaturesHow to Evaluate a Used Car?

What Class of Car?Economy Cars, Midsize Cars, Full-size Cars, Luxury Cars, Sport Utility Vehicles, Vans, Sports Cars, Pick-up TrucksDecide how you plan on using your vehicle and your budget be realistic with what you really need and how much you can afford.

Which Model?Research models and manufacturers to help you make a wise buying decision. Kiplingers Personal Finance Magazine (December issue specializes in vehicles), Edmunds New Car Prices and Kelley Blue Book will give you a general idea of what you should expect to pay for specific models. Motor Trend, Car and Driver, and Road and track will give you information on luxury and sport vehicles. Consumer Reports April issue is devoted to evaluating new cars.

Safety Features Larger cars are typically safer than smaller cars. Check Consumer Reports for tests and results of safety for different makes and models of vehicles. Air bags significantly reduce accident injury and death.

7The car-Buying ProcessDetermine a Fair PriceThe Invoice PriceSticker PriceHow to Calculate a Fair PriceYour Trade-In

Determining a Fair PriceInvoice PriceYou should find out before shopping, the invoice price of a vehicle (the amount the dealer paid for the vehicle) This information can be found on line, by mail, from Consumer Reports, etc. The report could cost you a fee (approx $12) but it may save you hundreds of dollars. Sticker Pricethe price the dealer is asking for the vehicle (MSRP) manufacturers suggested retail price. This is usually 9-11% above Invoice Price.

How to Calculate a Fair Price A fair profit is about 3% of the invoice price plus the options.Calculate by taking the invoice price and adding the dealer cost for options, subtract any rebates or incentives, then add 3% to the amount (multiply by 1.03). This is the amount you shoot for actually paying.Your Trade InYou will get the best price for your old car if you sell it yourself but if you want to trade it in, research its value first.

8LeasingLeasing Renting use of a vehicle by making specified payments over a stated period of time.Long term rental with the option to buy at the endAccording to the New York Times Jan 15, approx. 25% of cars are leasedHow a Lease WorksYou own the right to use the car not the car itselfWho Should Not Consider a Lease?Can pay cashDrives a lot of milesKeeps car for long timeHard on vehicles

Lease TermsGoss Capitalized CostCapitalized Cost ReductionAcquisition feeResidual ValueMoney FactorMonthly paymentMileage Allowance Excess Wear FeeDisposition Fee

Steps to LeasingNegotiate the PriceResidual Value Down paymentFinancingBefore ReturningReturn

Finance OptionsMore than 80% of people who buy new cars in the US use creditSome dealers offer their own credit, or use a local bank to finance their customers. Some manufacturers offer credit. This can be very convenient to get your car and your credit at the same place. But this may not (probably is not) be the least expensive way to finance a vehicle. Keep in mind that they are in the business of selling cars, not getting you the lowest rate. Also, many dealerships get a kick-back or cut of the profit by getting you to finance with a particular company.

How a Lease WorksA lease is not the same as buying a car. You own nothing, just the right to drive the vehicle. After you have made all your payments, you do not get to keep the vehicle, you must return it or buy it based on its value at the end of the lease.

Lease TermsGross Capitalized Cost the price you would pay for the car which should be negotiated just like you were buying the car.Capitalized Cost Reduction Cash down paymentAcquisition Fee The cost to cover the cost of setting up a lease. It often includes a security deposit that will be returned at the end of the lease pending the condition of the vehicle upon return.Residual Value the predicted value of the car at the end of the lease (the amount you will pay at the end of the lease if you decide to buy the car)Money Factor the interest rate Monthly Payment Your monthly payment for leasing the vehicleMileage Allowance the number of miles you will be allowed to drive the car without paying an extra charge per mileExcess Wear Fee amount charged for damage to the car that is beyond that which could reasonably be expected.Disposition Fee amount paid to return the car at the end of the lease to cover the cost of getting the car ready to sell.

Steps to Leasing1. Negotiate the Price2. Know the Residual Value If the residual value is 60% it means that the dealer plans on selling the vehicle for 60% of its initial value when it is returned and you will be leasing the other 40%. 3. Down Payment This is a portion of the total lease amount that will reduce the amount of your payment, this money will not be returned to you. Additionally you will pay your Acquisition fee also (approximately 1 months lease payment) which will be returned at the end of the lease provided you follow the terms of the lease.4. Financing Take the amount you are financing for the lease (price residual value down payment) and multiply it by the money factor (interest rate) then divide by the number of months of your lease for your monthly lease payment. Another factor is the mileage. If you know you will exceed the maximum mileage allowance (approx 12,000 miles a year) you can add the additional cost to the monthly payment instead of having to pay a lump sum at the end of the lease.5. Before you Return the Leased Vehicle Have a mechanic make an inspection of the condition of the car in writing. It might be less expensive to have something fixed now than once it is turned in and fixed at the dealership.6. Return the Leased Vehicle The dealer will do an inspection of the vehicle for wear and damage. Then pay the disposition fee and walk away or negotiate for another vehicle or the one you have been driving.

9BuyingThe Buying ProcessWhere to ShopDealershipNo-Haggle DealersBuying on the netWhen to ShopTest DriveExamine FirstThen Drive

How to Negotiate the DealRound 1Round 2The Final PriceRead All Paperwork

Where to ShopShop at several dealerships not just one. Ask friends and family about their experiences at different dealerships

No Haggle Dealers This means the price is not negotiated. The price on the car is the price everyone pays. This can be good because you dont have to worry if you got the best deal but it could be a more inflated price over the 3%.

Buying on the net There are businesses on line that you can join that will search dealers and shop for a specific vehicle for you. Some of them charge you a fee for member ship and some charge a fee to the dealers they use. They dont actually do the transaction for you though, you must go to that dealership to complete the buying process.

When to ShopSales people are typically paid at the end of the month, so they may be more willing then to make a good deal to increase their monthly commissions. Fewer people shop for new cars in the winter, so sales people may be more willing to negotiate. When new models are getting ready to be released (usually September) dealerships will be trying to get rid of old stockAugust and December are the best months to get the best deals

Test DriveDont talk price when you first meet a sales person. Find out about the car first.Examine First make sure you have looked over the car inside and out before taking it for a test drive. Look for paint defects, smooth fitting panels, it should be comfortable to sit in and all the controls and features like the radio should be in working order. Sit in the back seat to make sure passengers will be comfortable and safe. Check out the trunk for space and a spare tire.Then Drive Concentrate on the sound and performance. Drive in city and highway traffic. Go through all the gears, check for visibility and response.

How to Negotiate the DealDont be pressuredAlways be willing to walk awayDont tell the sales person the price or monthly payment you can afford.Dont tell the sales person if you intend on trading in a vehicleTell the sales person that you intend on shopping around to find the best dealNegotiate the price of the car only, not the monthly payment or the trade in of your vehicle

Round 1 Make your first offer a little above the invoice price but under the 3% fair price. Dont reveal anymore information until the sales person makes a counter offer. That offer should be lower than the sticker price.Round 2 Same process. Make an offer between your previous offer and the 3% fair price. The sales persons counteroffer should come down as well.

Continue this process until you are as close to the Fair Price that you think you can get. How close you get may depend on timing and supply and demand.

Final Price After you settle on a price understand you will pay a few extras:Sales taxDestination fee shippingLicense and RegistrationDocumentation fee no more than $50 - $100

Other than that anything else that increases the price should be agreed to by you and negotiated on the price.Read all the paperwork before you sign the contract

10Fast numbers

1:48This video shows how a sales person can manipulate the situation and confuse the buyer. The video is used as a training video for sales people.

11Finance and Insurance (F&I)The F&I OfficeFinancingInsuranceOptional ProductsThe Sales ContractCash PriceDown PaymentUnpaid Cash BalanceInsurance PremiumsPrincipal Amount FinancedFinance ChargeTotal Cost of the LoanPayment Schedule

After you have negotiated the price with the sales person, you go to the Finance and Insurance office to complete the paperwork.Financing - If you bring your own financing, the paperwork is drawn up using that information. If you are financing through the dealer they will do that paperwork there (many dealers add a Dealer Reserve to the percent that they actually negotiate from a bank for you as a fee for getting you the financing).

Insurance You will be offered many insurance options:Accidental death and dismemberment to cover your loan if you should die or become dismembered due to an accident.Gap Protection If your car is totaled, this extra insurance will pay the difference of what you owe on the loan and what the car is worth.Extended Warranty protection if parts go bad on the car that are not covered by the regular warranty or that will extend the life of the warranty on those parts that are covered.The cost of these options will be added to the amount that you are financing. Sometimes it is better to check with your insurance company for additional coverage through them instead.

Optional ProductsYou will be offered optional add-ons like pin stripping, rust protection and/or security systems. The finance manager gets a commission for selling these items to you.

The Sales ContractBefore signing the contract check the following:Cash Price This should be the same price you negotiated with the sales person. This is the price without add-ons and/or financing costs. Down Payment This would be any cash you are giving them and the value of any trade in that you negotiated.Unpaid Cash Balance This should be the negotiated amount down payment trade inInsurance Premiums If you purchased insurance recheck the priceOther Costs Anything else you agreed to pay should be listed, if anything is listed that you dont understand or didnt agree to, now is the time to ask and have it removed if necessary. Some dealerships add a title and license fee.Principal Amount The total amount being borrowed including add-ons and insuranceFinance Charges Total interest you will pay (It must be stated as APR), Make sure the term of the loan is in writing (# of months)Total Cost of the Loan Sum of the principal and finance chargesPayment Schedule - # of payments, amount of each payment, date each payment is due, date of 1st payment

***If any of this doesnt add up or the dealer cant answer your questions DONT SIGN THE CONTRACT

12Is it cheaper to buy or lease?

2:01

Goes with the math section because it talks about the key words in leasing and what they mean.13Math activity 19 leasing a vehicleWhen leasing a car, its tempting to just focus on the size of the monthly payment. However, consumers who understand how leasing works can make sure the terms of the lease are fair and that theyre getting a good deal.

Net Capitalized Cost = Capital Cost Reductions + Fees

Depreciation = current value * rate of depreciation

Money Factor = APR / 2400

APR = Money Factor * 2400

14Math activity 19 Calculating lease paymentsIf you want to lease a vehicle, its a good idea to know how monthly lease payments are calculated. After all, if youve negotiated a lower capitalized cost or if youre getting a rebate, youll want to be sure that those factors have been correctly figured into the monthly payment.Depreciation Fee = (net capitalized cost residual value) / months in lease

Finance Fee = (net capitalized cost + residual value) X money factor

Sales Tax = (depreciation fee + finance fee) X local sales tax rate15If you borrow money for 1 month, you must calculate the interest from a yearly rate.

Ex: You borrow $15,000 for 1 month at an APR of 10.5%. How much interest will you pay?

10.5%/12 = .875%$15,000 * .875% = $131.25Simple interest for 1 month16Changing fraction to percentIf you have a fraction and need to convert it to a percent, divide the top number by the bottom number, then move the decimal place two digits to the right:

Ex: = 3 divided by 4 = .75 = 75%17Leaving a tipThe standard tip amount is between 15% and 20% of your total bill before tax. You are always able to give less or more but you should always know how much you are giving in proportion to your bills.

To figure the tip, take the amount of the bill multiplied by the percent you would like to leave:

Ex: $65 bill X 20% = $13

18How to Maintain a Car

Maintenance Every Car NeedsYour Owners ManualRoutine Preventive TasksTiresOilOther FluidsTune-upsBrakesOther Routine ChecksExterior MaintenanceRepair ServicesHow to Choose a Repair ShopCheck Them OutBuild a RelationshipDoing Business with a Repair ShopDescribe the ProblemGet an EstimateGuaranteesCheck and Pay for RepairsSave Your ReceiptsTo Resolve ProblemsLemon LawsMaintenance Every Car NeedsYour Owners ManualThe owners manual will show you where all the controls are located an how to operate them. It will tell you such things as how to read the gauges and what the warning lights mean.It will give you a detailed maintenance schedule. If you dont follow this schedule, you may void your warranty.

Routine Preventive TasksTires should be properly inflated (saves on gas), check tread wear. This can show you if you are having an alignment problem. Also worn out tread will not grip the road and can cause an accident.Oil lubricates your engines moving parts. Running on low or no oil will wear out your engine. Oil changes should be done according to manufacturers recommendation.Other Fluids - transmission fluid and brake fluid, also antifreeze.Tune-ups replaces the spark plugs, air and fuel filters, hoses etc.Brakes usually last about 40,000 milesOther Routine Checks inspect hoses and belts. Look for bulges or cuts. Check windshield wiper blades and fluid. Look under the car for leaks and the exhaust for rust and supportExternal Maintenance Keep road grime and salt off your car to prevent rust. Wax your car at least once a year

Repair Services How to Choose a Repair ShopWarranty work should be done by a dealershipRegular repairs can be done at a dealership but will probably cost more than at an independently owned shop

Ask around about repair shops, get recommendations from family and friends

Check the BBB and look for certifications

Build a relationship talk to the workers, explain your problems and what you would like done, listen to their suggestions and respond well, continue to do business at the same place to build a history.

Doing Business With a Repair ShopDescribe the Problem Make a list of sounds and symptoms before you go in. Indicate when they happen and how often you hear/see themGet an estimate in writing before anyone works on the vehicle. Make sure labor and parts are all included. Once you sign the estimate, you are agreeing to the work and the price and will be expected to pay for it once it is done.Guarantees Ask about guarantees for the work and labor and get them in writingCheck and Pay for Repairs The paperwork should make note if new or rebuild parts were used. By law the shop must return all replaced parts to you if you request them. Before paying, check to make sure the problem is gone, if need be test drive the car. The mechanic may want to ride with you so that you hear the same things.Save Your Receipts Receipts prove payment, keep track of dates and work preformed as well as where the work was done.

To Resolve ProblemsTry to work through the manager of the shop that did the work. If that doesnt work try the BBB

Lemon Laws (according to Illinois Attorney General)In order to be covered by the Illinois Lemon Law, a vehicle must:Have a nonconformity that both substantially impairs the use, market value or safety of the vehicle and is not repairable by the dealer or manufacturer in at least four attempts for the same repairorbe out of service for a total of 30 or more business days

Lemon Law DOES NOT Cover:Used cars, altered or modified vehicles or motorcycles and boatsYou must file a Lemon Law Claim with the Industry Third Party Dispute Resolution Program (contact found in your owners manual). Your claim must be filed within 12 months of purchase date

If you win your claim:You will receive a replacement vehicle of like or similar valueorThe manufacturer will buy your vehicle back from you, less the value for miles drivenCheck to see if your car is a lemon by looking up the vehicles VIN (vehicle identification number)19