1. Transportation and Buying A Car CONSUMER ED

2. 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.

3. Transportation Options  1. Public Transportation  2. Car Share/ Rental  3. Leasing a Car  4. Buying a Used Car  5. Buying a New Car

4. 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”

6. 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.

7. 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.

8. 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.

10. 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!

11. 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!

12. 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 ________________________!

13. 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