1 / 17

Making Automobile and Housing Decisions: Auto Buying

Chapter 5 Making Automobile and Housing Decisions: Auto Buying Replace the junker ... First major purchase Needs versus Wants Fit car into your annual budget Salary $35,220 Taxes 10,000 Rent 6,500 Utilities 3,600 Food 3,000 Other 1,800

flora
Download Presentation

Making Automobile and Housing Decisions: Auto Buying

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 5 Making Automobile and Housing Decisions: Auto Buying

  2. Replace the junker ...

  3. First major purchase

  4. Needs versus Wants

  5. Fit car into your annual budget • Salary $35,220 • Taxes 10,000 • Rent 6,500 • Utilities 3,600 • Food 3,000 • Other 1,800 • Savings 3,520 • Car payment, insurance, operation6,800 • $ 0

  6. Find maximum price • Budgeted amount $6,800 • Insurance 400 • Operating costs 1,000 • Car payments $5,400

  7. Payment: $5,400/12 = $450 4 years x 12 mo. = 48 6%/12 mo. = .5% Calculator PMT: -450 n: 48 i: .5 Compute PV $19,161 What Can You Afford?

  8. Choices? 2008 Honda Element -- $18,750 2008 Honda Civic -- $15,210

  9. What Can You Afford? • Payment: $5,400/12 = $450 • 6 years x 12 mo. = 72 • 6%/12 mo. = .5% • Calculator • PMT: -450 • n: 72 • i: .5 • Compute PV • $27,152

  10. Other Choices Chevrolet Malibu Hybrid -- $23,640 2008 Mazda Miata -- $25,030

  11. Monthly Payment Computation $22,500 5 years x 12 mo. = 60 8%/12 mo. = .6667% • 5 years (n=60): $456.22 • 4 years (n=48): $549.29 • 3 years (n=36): $705.07 Chevrolet Impala

  12. www.consumerreports.org www.autosite.com www.caranddriver.com www.edmund.com www.autoconnect.com www.autoweb.com carpoint.msn.com www.kbb.com www.nhtsa.dot.gov www.intellichoice.com Internet Sources of Car Information Don’t forget about taxes, insurance, and operation!

  13. Making your purchase • Get the best price • Negotiate with 3 or more dealers • know the dealer’s cost of the vehicle • understand the various dealer markups • be aware of any rebate that may apply • Use buyer services, e.g., www.samsclub.com, www.costco.com

  14. Making your purchase (continued) • Use Internet or fax dealers yourself • Do test drive at local dealership • Decide on features and color you want • On internet shop auto companies’ sites for inventory at different locations; you’ll need to insert zip codes of cities of interest • Prices differ by location because dealers use different incentives (examples from 2002) • Ford Explorer costs vary $4,300 nationwide from $32,281 in Tennessee to $27,939 in Oklahoma according to J.D. Power & Assoc. • Lexus RX 300 costs $37,604 in N. California but $35,333 in S. California.

  15. Making your purchase (continued) • Evaluate financing alternatives • Avoid until after price of car is set • Find the best interest rate • Consider a lease

  16. Tip: Smarter Tires?* • Tire pressure is one of the most important factors in auto safety and efficient operation • Improves handling, fuel economy, tire life • Feds considering requiring micro-chip to monitor tire pressure • Costs $70 per car *WSJ 7/14/04

  17. Questions?

More Related