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Transportation and Buying A Car

Transportation and Buying A Car. Consumer Ed. 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. Transportation Options. 1. Public Transportation

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Transportation and Buying A Car

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  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 Cons Not as flexible as car ownership Lack of convenience Dealing with weather extremes Difficult to transport “stuff” • Cheapest option • Environmentally friendly • May be faster at certain times (rush hour) • Don’t have to worry about parking

  5. 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.

  6. 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.

  7. Buying a Car: New or Used New 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. • 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.

  8. 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!

  9. 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!

  10. 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 ________________________!

  11. 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 interestover 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

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