FFIB Program Finance-Fraud-Insurance-Banking and you…
Why Are We Here? Teens Between 13 – 18 Spent $155,000,000,000 in 2000. Source: Stages magazine, Fiscal Fitness for Teens, Summer 2001 Issue.
Your experience is limited. You are a Prime Target for SCHEMES & SCAMS
PERSONAL DEBT The average college undergraduate student has $2748 in credit card debt. At 18% interest, and paying $50 per month, it will take 9.5 years to pay this debt off. Source: Stages magazine,Fiscal Fitness For Teens. Summer 2001 issue.
Your First Car: Have you thought about…. Needs vs. wants New -- Rebates and other incentives; new car warranty Used -- as is - Lemon Law ( does not apply to used autos ) Financing or cash Reputable, licensed dealership Accurate/fair pricing – check book values Insurance costs, maintenance/gasoline costs Can you pay for it ? Live with it ?
Buying a Car: How will you pay? Lot Financing on the spot Bank Credit Union Credit Card Cash? leasing a car is an option
Negotiate!!! Prices Interest rates Trade in allowances Down Payment Signed Contracts are Final!!!
Consider the Real Car Costs Do you have a trade-in? Is there a lien or outstanding loan on the car? What payment can you live with? What is the interest rate? How many payments? Out of Pocket Repair Expenses? What is the cost of the insurance premiums? Dont forget Other costs such as tag, title, or registration
True Cost of 95 Mustang Itemization of Amount Financed Itemization of Amount Financed Cash Price $5,900.00 Down Pmt -900.00 Unpaid Bal 5,000.00 + Tax + Doc Stamps 18.00 +Tag/Title 35.00 Optional: +Credit Life Ins 107.00 +Add-Ons. 1,000.00 Amt Financed $6,160.00 Finance Charge 3,141.60 Total of Payments $9,301.60
RATE / MONTHLY PAYMENT COMPARISONS CREDIT UNION BANK / DEALERSHIP LOCAL LOT FINANCING 7.25 % APR 10.25 % APR 29.07 % APR $190.93 $201.59 $258.38 36 Months
… best deal Do not buy on impulse Take used cars to YOUR mechanic for a look before buying Dont believe verbal promises of sales staff –We owe you…Get it in writing!! Do not sign any papers with blank spaces, not fully completed Understand the payment schedule –# of payments – is there a balloon note at end? Ask about any fees you dont understand Ask for the opinion of someone you trust Be ready to walk away – the same deal will still be there tomorrow!
Under state law, if you own a motor vehicle, you must carry Property Damage Liability ( PDL ) and Personal Injury Protection ( PIP ) Under state law, if you own a motor vehicle, you must carry Property Damage Liability ( PDL ) and Personal Injury Protection ( PIP )
Comp. & Collision Banks and other lending institutions will require comprehensive and collision when a car is financed. Comprehensive Coverage: pays for replacement or repair when damage is caused by fire, theft, windstorm, vandalism, flood, or other non-collision damage. Collision Coverage: pays to repair or replace your automobile when you collide with another vehicle or object, or your vehicle is overturned. Force Placed Insurance
The Deductible is what will come out of your own pocket, after a crash. Deductible: $2,000 Damage: $1,800 Coverage: $0 Deductible: $2,000 Damage: $1,800 Coverage: $0 Insurance PaysYou Pay!!! Comprehensive & Collision
The Deductible is what will come out of your own pocket, after a crash. Medical Expenses: $10,000 Deductible: $2,000 You pay the deductible, plus 20% of medical expenses ($2,000) Total You Pay: $4,000 Medical Expenses: $10,000 Deductible: $2,000 You pay the deductible, plus 20% of medical expenses ($2,000) Total You Pay: $4,000 PIP
Driving history Type of vehicle you drive Where you live Your gender Your age Drivers Education Your grades How you use your vehicle (workpizza delivery)
The PREMIUM is the money you pay to the insurance company. Pay in full – coverage for 6 months Monthly payments Premium Finance Company* *A high interest rate may make the premium unaffordable.
Insurance Quotes for 95 Mustang Company AFemale: $1785 Male: $2236 Company BFemale: $1833 Male: $2305 Company CFemale: $1350 Male: $1762 www.YourInsuranceCo.com
Remember the 1995 Mustang that cost $5900? What will it really cost? $9301.60 is the total amount financed Monthly Car Payment $258.38 Monthly Insurance Payment: $312 Total Monthly Cost of Your Car: $570.38 Total cost: $20,533.68 over 36 months +Dont forget gas and maintenance!
… And then, there was Credit … The reputation for solvency and integrity entitling a person to be trusted in buying or borrowing. An arrangement for deferred payment of a loan or purchase. Loan: A sum of money lent at interest.
Credit Sources Banks and Credit Unions are the Best. The interest rates are lower. Finance companies are less desirable.
Establishing Your Credit Open your own checking or savings account – before you turn 18. Once you turn 18… Your first credit card Rental agreements Utilities in your name Cellular phone
Credit Limits APR – Annual Percentage Rate Annual Membership Fees Over the Limit Fees Monthly Fees Late Payment Fees Any Incentives Secured Credit Cards Pre-paid or Guaranteed Credit Cards Interest Rates and Penalties
Credit Card Sense Pay off the balance as soon as possible. Make payments on time. Dont have more than one credit card. Check/verify all charges when you get your monthly statement. Immediately notify the company in writing of any inaccurate information. Save card use for special occasions or emergencies Never let friends borrow your credit card Shred unused credit card offers If your card is lost or stolen ….
Understand what you sign/ Know Your Rights ALWAYS read what you are signing Dont sign blank contracts Walk away from sales pressure GET COPIES of anything you sign, especially contracts and policies Keep receipts Get it in writing – verbal agreements are not legally binding Dont hurry into a deal that you dont understand Research before you buy and ask questions Take an experienced friend with you