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Lesson 5

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

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Lesson 5

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  1. Lesson 5 Buying a Car

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

  3. 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.?

  4. New or Used? • New car • You are 1st owner • Warranties • Loses at least 30% of its resale value in 1st 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)

  5. 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

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

  7. 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

  8. 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

  9. 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

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

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