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Buying a Car

Buying a Car. Questions to ask yourself?. Is it a good time in your life? Do you need a car? Can you make the payments? Can you afford all costs? Gas, insurance, repairs,. How much can you afford?. You shouldn’t spend more than about 13% of your income

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Buying a Car

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  1. Buying a Car

  2. Questions to ask yourself? • Is it a good time in your life? • Do you need a car? • Can you make the payments? • Can you afford all costs? • Gas, insurance, repairs,

  3. How much can you afford? • You shouldn’t spend more than about 13% of your income • Example: Income $40,000 = ____________ • $5,200/12 months= ____________ • $433 per month which should include ALL expenses car payment, car insurance, gas etc.

  4. To Buy New or Used • Which do you think is best? • What are some advantages of a new car? • What are some disadvantages? • What are some advantages of a used car? • What are some disadvantages of a used car?

  5. Advantages: Nice new interior, shiny car and quiet ride. Reliable: have fewer problems and no repairs Repairs usually covered by warranty. Good warranty anywhere from 5 years or 70,000 miles (different with every dealership) Disadvantage: More costly Depreciates once driven off lot. Buying a New Car

  6. Advantages: If you are lucky cheaper monthly payments Sometimes a nice interior and in good condition Disadvantages: Costly repairs Mileage on the car Age of the vehicle You don’t know all of the problems with the car. Buying a Used Car

  7. Things to look for when inspecting a used car. • Mismatched paint: indicates an accident • Look for any rust • Look for stains on interior • Check all lights • Drive slowly and let go of the wheel? Why • Car should not pull to left or right if it does something is WRONG! • Step on brake firmly

  8. 7. Make sure gears shift w/o grinding or slipping out. 8. Look for any smoke too much is not a good sign. 9. Take it to a mechanic for a final check before you buy it. 10. Check car fax any history will show up with bin number.

  9. Choosing a Car • Compact • Sports cars • SUV • Pick up trucks • Luxury

  10. Choosing a car • Options and Features: • Leather seats • Cup holders • Air conditioning • Sunroof • convertible top • Cruise control • Power locks • Engine size.

  11. To Buy or to Lease • What is the difference? • What do you think is the difference between the two?

  12. To Buy • When you buy you will own the car once you pay off the loan.

  13. To Lease • To lease a car similar to renting. • When you lease you are renting the car from the dealership but you are still making monthly payments. • At the end you do not own the car it goes back to the dealership. • Lease for certain years, with terms and limitations: you can only drive a certain amount of miles.

  14. Who should lease? • Someone who: • Can’t pay for a new car • Replaces cars regularly • Drives 12,000 miles per year

  15. Who should NOT lease? • Someone who: • Can pay cash for a new car • Drives many or very few miles • Keeps a car for many years • Is hard on a car: drives a lot, doesn’t take very good care of car.

  16. Car Buying Process • Figure out how much you can afford • Pick a car make and model that you like • Figure out how much you can put as a down payment • Dealership • Read the sticker price • Test drive • Negotiate a price on the vehicle

  17. 5. Take your down payment and subtract from unpaid cash balance • Example: $1,000 down payment on $16,065 the amount to be financed is _____________? • $15,065. Finance = the amount of interest you will pay over the term of your car loan. • Car loan 8% interest for 48 months. How much is the interest? • Total finance charge is: $2,588.74

  18. How do they figure out the finance charge? • They take your offer and take it to a finance manager. • They will take all of you information to run a credit check. • They qualify how much you are putting down, if you are trading a car and then they “grade” you. • Grading means the “risk” then they offer you a interest rate. • How many months you are financing.

  19. Putting it all together • The better your credit • The more money you put as a down payment • The shorter length of the loan = the risk and will = your APR. • Example: if you are not putting a lot of money down and your credit score is low your APR may be higher 20% • If you give a larger down payment and your credit score is high your APR could be 4%.

  20. So what is important? • What do you think is important to do?

  21. Last Step • 6. Signing your note (contract): • When you sign you are agreeing to make monthly payments to bank/credit union/finance company WHOEVER YOU BORROWED FROM. • Once everything goes through you can take you car home. (After the 2-4 hour process) • You must agree to payment schedule and get all of the information that you need.

  22. What happens if you don’t pay? • If you do not pay your car can get repossessed. • Why? • Because you do not own the car the bank/credit union owns the car UNTIL you pay off the car loan. • Then YOU get the title. • Title is the deed to the car which says you are the owner.

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