LESSON 5 Buying a Car. Terms Review APR Coupe Collision Insurance Lease Liability Insurance Loan Minivan No-Fault Auto Insurance Sedan SUV (Sports Utility.

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Presentation transcript:

LESSON 5 Buying a Car

Terms Review APR Coupe Collision Insurance Lease Liability Insurance Loan Minivan No-Fault Auto Insurance Sedan SUV (Sports Utility Vehicle)

Which Car is Right for You? Type of car: Fuel efficient Small Able to carry a lot of passengers Need to haul “stuff” Cost Can you afford monthly payment, insurance, gas, maintenance, etc.?

New or Used? New car You are 1 st owner Warranties Loses at least 30% of its resale value in 1 st 2 years Used car Owned by one (or more) other owners Cheaper than new car Not sure how well maintained it is or how “hard” it’s been driven May have been in accident (CarFax)

What Can I Afford? What features do you need? Cost of insurance based on value of car More features & more expensive car = more expensive insurance Size/type of vehicle Smaller cars more fuel efficient Larger cars can carry more stuff and/or people

Insurance Cost based on value of vehicle and your driving Liability Collision Comprehensive Uninsured/underinsured motorist “No Fault”

Where to Find a Car Car lots New and/or used cars available Pay more for used car than if bought directly from individual owner Classified ads/Other Purchase from individual owner Research car before buying Research quality Consumer Reports, Car & Driver, Road & Track, etc. Research Cost Kelley Blue Book, Edmunds

Own vs. Lease Own Can do with what you wish Better stereo Other customization Car payment higher than lease Lease Pay someone else for the privilege of driving their car You don’t own it Car payment less than if purchased outright May have to pay penalties if you exceed mileage limits in lease agreement

If Buying Car: Put down 20% as down payment Protects loan from going “upside down” Monthly payment lower What do lenders look for? Steady income Established residence Established employment Credit history

Operation & Maintenance Oil changes 3 months or 3,000 miles (some may be longer) Tires May need to replace Rotate every other oil change Buy based on driving needs, not on being “cool” Repairs Parts wear out and break Regular maintenance Replacement can be expensive Budget for & save $200 - $500 per year for at least one medium-sized repair

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