PERSONAL FINANCE

1. CAR BUYING PROCESS PERSONAL FINANCE

2. Phase 1 – Before you Shop • Identify your wants and needs • What features would you like • Prioritize your wants • Be realistic about your needs • Identify and Research Choices • Consumer Reports, Edmund’s, Car and Driver

3. Phase 1 – Before you Shop • Determine what you can afford • Budget for maintenance costs, gas, insurance • Decide how you will pay • Pre-Approval – being qualified for a certain amount for a loan prior to buying a car, good for 30-60 days • Check Insurance Rates • Call your insurance agent for a preliminary quote

4. Phase 2 – Evaluating Alternatives • Search for Available Vehicles • Internet, Classified ads, Auto Trader, Dealerships • Test Drive Vehicle • Decide whether to buy New or Used • New: Loses 20% of value in the first year; will probably come with warranty • Used: Typically no warranty; will be less expensive than buying new

5. Phase 2 – Evaluating Alternatives • Check History of Used Vehicles • Use Vehicle Identification Number (VIN) to check car’s history using Carfax; will list all previous owners, accidents, mileage at each sale • Get Used Vehicle Checked Mechanically • Have a mechanic conduct compression test, check the transmission, tires, brakes, etc. • Ask the seller for records of maintenance, emissions test, and inspections

6. Phase 2 – Evaluating Alternatives • Research Price • Check Kelley Blue Book • Fair price based on year, mileage, condition of car (used cars) • Sticker price – Manufacturer’s Suggested Retail Price (MSRP); posted in the window • Invoice price – what the dealer paid for the car • Negotiated price is likely to be 3 to 6 percent above invoice price

7. Phase 3 – Making the Purchase • Negotiate the Price • Make your initial offer lower than the maximum you are willing to pay • Negotiate new car price separate from the trade-in • Do not let your emotions show • Sell your old car rather than trading it in if the dealer does not offer you a reasonable amount

8. Phase 3 – Making the Purchase • Financing Your Car • Loans are offered in 36, 48, 60 and 72 month terms • Longer terms mean you pay more in total • Compare interest rates • Can finance at most dealerships through finance companies • Watch for promotions

9. Phase 3 – “Making the Purchase” Lease Option • Renting car for set contract period • Can buy out car at end of lease • Usually limits mileage • No large down payment required • You do not own the car at the end of the lease

10. Phase 4 – After the Purchase • Maintenance and Repairs • Yearly state inspection/emissions test • Oil changes every few thousand miles • Tune-ups • Major repairs • Tires

11. Consumer Protection • Warranty – written statement about the car’s quality; protects certain parts for stated time period • Warranties usually run out after stated time or mileage, which ever comes first • Service Contract – “extended warranty”; separately purchased agreement to cover repairs (extra cost) • Lemon laws protect owners who bought “lemons”; allows you to get a new car or your money back

12. Lemon Laws • What is a lemon vehicle? • What are lemon laws? • http://video.foxnews.com/v/4927304702001/how-to-spot-a-lemon-when-shopping-for-a-car/?#sp=show-clips