Researching an Automobile What should I look for?

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Transportation Part of everyone’s life 15 – 20% of an individual’s budget Automobile is the 2 nd most expensive purchase, only after a home

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Want to Buy a Vehicle? Consumers should plan their vehicle purchase to avoid any costly mistakes Any large purchases should be planned Places to purchase a vehicle: Dealership, private owner, internet

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Planned Buying Process 1. Prioritizing wants 2. Pre-shopping research 3. Fitting the budget 4. Comparison shopping 5. Negotiating 6. Making the decision 7. Evaluating the decision

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Step 1 - Prioritizing Wants Assess transportation needs and wants Need: something thought to be a necessity Want: something unnecessary but desired Consider all automobile options as wants Prioritize the wants from low to high priority Prioritizing wants helps the consumer Consider costs and benefits of different vehicle options Consider the “big picture” of the vehicle purchase rather than a specific want (such as heated seats, color, engine size, etc)

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Prioritizing Wants – Questions to Think About How will the vehicle be used? Where will the buyer be living? How will the vehicle be stored or parked? How much will it be driven? What options would the buyer like in the vehicle?

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Step 2 – Pre-shopping Research Research should be based on transportation wants Complete this before visiting a car dealership or salesman Helps the buyer to be informed about: What they are looking for Vehicles in their price range Available options

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Ways to Perform the Research Family & friends Experiences with different makes and models of different vehicles Likes, dislikes, and recommendations Periodicals Consumer Reports Federal Citizen Information Center Kelley Blue Book Motor Trend Car and Driver Access this information at the public library and/or the internet

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Price Research Price Base price: vehicle price with standard equipment, no extra options MSRP: Manufacturer’s suggested retail price Includes base price, price of options installed by manufacturer, and their transportation charge Sticker Price Dealer’s initial asking price

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Price Research continued Price continued Determine how much a dealer paid to help decide which vehicles to consider and to negotiate a fair price Consumer Reports, Kiplinger’s Personal Finance magazine, and Edmund’s New Car Prices Used cars Blue book price: dollar value given to the vehicle based on its year and model Used as a guide for car dealers and banks for pricing trade-ins Kelley Blue Book

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Vehicle Options Research General type of vehicle Car, truck, 2-door, SUV, sporty Make and model Ford Taurus, Honda Accord Safety Braking and emergency handling, airbags Reliability Some specific models have high marks, may be higher priced but will save on repair costs

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Vehicle Options Research continued Fuel economy Type of gas used, gas mileage Power and performance Driving on highways, steep hills, mountains, snow, muddy roads, or in a city Comfort and convenience Size of headroom and legroom, cargo space

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Vehicle Options Research continued Insurance Chosen vehicle affects the price of insurance; obtain a quote for the vehicles being considered Other options Power steering and brakes, manual or automatic, air conditioner, rear-window defogger, radio/tape/CD player, type of tires, cruise control, sun roof, heated seats, power door locks and windows, etc.

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman New vs. Used Research New Vehicle: Not pre-owned Warranty Manufacturer options Wide selection Expensive Depreciation Loss in the vehicle’s value due to time and use (greatest cost) Used Vehicle: Cost less to buy Cost less to insure Avoid rapid deprecation Wide selection May offer warranty Returned leased cars Have an independent mechanic inspect any used car before purchase

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Step 3 – Fitting the Budget “Can I afford it?” Most important question Amount the buyer can afford in his/her budget dictates the vehicle price All costs must be taken into consideration before choosing a vehicle

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Fitting the Budget continued Fixed expenses Depreciation Insurance costs Loan payment and interest if financed Parking fees Licensing Registration Flexible expenses Maintenance Gas Oil Repairs *Vehicle price is not the only cost involved

Stop to complete activity

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Step 4 – Comparison Shopping Comparing services or products to determine the best buy or quality product at a fair price Allows the consumer to build upon the information learned in the pre-shopping research *As the price of a vehicle increases, consumers are often not buying additional safety, capacity, or power, but instead style and prestige

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Comparison Shopping continued Narrow the choices to a few specific makes and models with desired options Visit the appropriate store to learn more information about each choice to make comparisons Inquire about price, dealer incentives, financing options, leasing, warranties, and service contracts Test drive each potential vehicle

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Comparison Shopping continued Goal of comparison shopping Narrow the choice even further to negotiate for the best deal

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Step 5 - Negotiating Process of deciding the actual terms of the purchase and agreement between the seller and buyer Obtain a firm price before discussing any other aspects including a trade-in Compare prices from different dealers Let them know you have done your research and whether their price is high

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Negotiating continued Keys to all negotiations Be able to say NO Take the purchase to another business

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Step 6 – Making the Decision The best place to decide on which vehicle to purchase is NOT the showroom where you are around the dealer Take the information home to compare all options After making the decision, return to the dealer to close the sale

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Step 7 – Evaluating the Decision Think about the things which went well and what did not This will be helpful the next time a similar purchase is made If the process was successful and you are happy, compliment the seller If you have a complaint, make the complaint known to the seller then move to the supervisor if necessary

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Lemon Laws Lemon A vehicle in and out of the repair shop with problems monthly An estimated new 150,000 vehicles sold each year are lemons. Money Troubles, 2001, Leonard All states have enacted lemon laws Specifics vary state-to-state and are in place to protect consumers

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Lemon Laws continued To fall under the lemon law New vehicle must have a substantial defect which cannot be fixed in a reasonable time Defect remains unfixed after four repair attempts or the vehicle remains in the repair shop for a total of 30 days This allows the consumer the right to a refund or a new vehicle

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Lemon Laws continued What should you do if you feel you have purchased a lemon? Contact the state’s attorney general office to request information on the state’s lemon laws and how to use them if they have purchased a lemon

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Conclusion Before purchasing a vehicle, follow the planned buying process to avoid a costly mistake 1. Prioritize wants 2. Pre-shopping research 3. Fit the budget 4. Comparison shop 5. Negotiate 6. Make the decision 7. Evaluate the decision