Presentation on theme: "Transportation and Buying A Car CONSUMER ED. Overview Transportation is considered a basic need. Get to work, get to school, go shopping, etc. Depending."— Presentation transcript:
Overview Transportation is considered a basic need. Get to work, get to school, go shopping, etc. Depending on your (and your family's) needs, your mode of transportation may vary.
Transportation Options 1. Public Transportation 2. Car Share/ Rental 3. Leasing a Car 4. Buying a Used Car 5. Buying a New Car
Public Transportation Pros Cheapest option Environmentally friendly May be faster at certain times (rush hour) Don’t have to worry about parking Cons Not as flexible as car ownership Lack of convenience Dealing with weather extremes Difficult to transport “stuff”
Car Share/ Rental Some people rely on public transportation for day-to-day transportation, then rent a car as needed for grocery shopping, out of town travel, or moving “stuff.” Car shares, such as Zip Car or iGo, allow people to rent cars by the hour or day for a monthly fee.
Leasing a Car Leasing a car is the same as renting a car. You make a small down payment, and pay a monthly fee. You don’t actually take out a loan. You may choose to buy the car at the end of the lease. Pros Less $ up front Cheaper monthly payment/ nicer car Cons You don’t actually own the car. Mileage fees Excess wear fee If you buy, ends up being more expensive. Pay for insurance, gas, registration, etc.
Buying a Car: New or Used New Pros That “new car” feeling Warranty (50,000 miles) Reliability Cons Highest price ($15,000 and up) Loses value ($2,000+) and becomes a used car the second you buy the car. Pay for insurance, gas, registration, etc. Used Pros Cheaper Get a decent car for a decent price Smaller down payment/ less money owed Cons Unreliable aka “a lemon” May pay more for repairs/ not under warranty Pay for insurance, gas, registration, etc.
The Car Buying Process 1. Decide on the right car for you 2. Visit a dealership 3. Compare prices 4. Test drive 5. Negotiate a price (if applicable) 6. Determine financing options 7. Drive home in your new car!
Car Loans Once you’ve decided on your car, now you actually have to buy it! If you saved up and can pay cash for your car……AWESOME! However, most people need to take a car loan. Borrow $ from a bank and pay the $ back over time….with interest!
How A Car Loan Works (Financing) Start with your down payment. This is the amount of $ you have saved up and will pay towards the car TODAY. The larger your down payment, the less you’ll have to borrow, and the less interest you’ll have to pay. You will finance the remaining amount, borrowing that $ from a bank and paying it back over time (usually 3,4, or 5 years) Of course, any time you borrow $ you have to pay ________________________!
Example Example: Car costs $10,000 You make a $2,000 DOWN PAYMENT You borrow $8,000 from a bank and pay it back over the course of 3, 4, or 5 years. Longer payback period means lower monthly payments but more interest over time. $8,000 @ 4% over 3 years= $960 interest $2000 DP + $8000 PRIN + $960 INT= $10, 960 $8,000 @ 4% over 4 years= $1,280 interest $2000 DP + $8000 PRIN + $1,280 INT= $11,280 $8,000 @ 4% over 5 years= $1,600 interest $2000 DP + $8000 PRIN + $1,600= $11,600