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Buying a Car

Buying a Car. Managing Your Financial Future. Steps in the Car Buying Process. 1. Identify your needs and wants What do you need to do with your car? Will you drive a lot of miles? What features would you like to have? You may have to trade off some of the wants for a lower price.

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Buying a Car

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  1. Buying a Car Managing Your Financial Future

  2. Steps in the Car Buying Process 1. Identify your needs and wants • What do you need to do with your car? • Will you drive a lot of miles? • What features would you like to have? • You may have to trade off some of the wants for a lower price

  3. Steps in the Car Buying Process 2. Determine what you can afford • General Guideline: monthly payments should be no more than 20% of money left over after paying regular monthly expenses (rent, utilities, credit card payments etc) or you can utilize the 20/10 rule (total debt monthly payments should not be more than 10% of your monthly net income) • Cost of maintaining car (gas, oil etc) • Insurance

  4. Steps in the Car Buying Process 3. Identify and Research Your Choices • Compare features of the models against list of wants and needs • Compare models with the same options • List pros and cons of each model

  5. Steps in the Car Buying Process 4. Decide whether to buy new or used • Cost is a major factor in this decision • New car loses much of its market value as soon as it is purchased. • Used car may need more repairs.

  6. Steps in the Car Buying Process 5. Get credit pre-approval • Allows comparison of total costs of buying, including credit rates • Fill out an application at credit union or bank

  7. Steps in the Car Buying Process 6. Research Insurance Rates • Call Insurance Agents and compare rates with at least three different companies

  8. Steps in the Car Buying Process 7. Search for available vehicles • Newspaper ads • Internet • Craigslist • Autotrader • Cars.com • Dealer websites • List cars that meet your specifications, features, prices

  9. Steps in the Car Buying Process 8. Test Drive Each Vehicle • Compare ride, handling, braking, features and costs • Try all features • Look for rust and mismatched paint which could indicate car has been in an accident

  10. Steps in the Car Buying Process 9. Check the History of a Used Vehicle • Each vehicle has a unique VIN (vehicle Identification number) that identifies the car • VIN is on the dashboard in front of the driver and on all vehicle documents • Request a CarFax report from the previous owner

  11. Steps in the Car Buying Process 10. Get the vehicle checked mechanically • Have the car checked out by a mechanic that you trust • Vehicle Emission Test- test to verify that a vehicle meets the minimum clean-air standards • Safety Inspections

  12. Steps in the Car Buying Process 11. Determine a fair price • New Car sticker price or MSRP (manufacturer’s suggested retail price) • Invoice Price-price the dealer paid for the car • Subtract any destination charges • Make sure you understand and look up any charges that do not sound right

  13. Steps in the Car Buying Process 12. Negotiate the price • Stick to the facts • Negotiate the price of the new car separately from the price of your trade in.

  14. Steps in the Car Buying Process 13. Dealer Add-Ons • High-priced, high profit dealer services that add little or no value to your car • Tell the dealer you do not want these services on the car and remove them

  15. FINANCING YOUR CAR 14. Financial Institutions • Banks • Credit Unions • Online lenders • Compare rates and terms

  16. FINANCING YOUR CAR • Car Dealers • May offer better terms on particular models and at particular times of the year- sponsored by manufacturers or their financing agencies

  17. LEASING A CAR • It is a written agreement that allows use of the car for a specified time period and monthly payment • Usually have option to buy the car at the end of the lease period • Can lease more expensive car than could buy on credit • Always have a car payment but a good way to always drive a new car

  18. Consumer Protection for Car Buyers • Warranty- states what manufacturer or dealer will do if car does not perform as it should • Lemon Laws-for cars needing repairs; a lemon is a car with substantial defects that the manufacturer has been unable to fix after repeated attempts. • 4 times to fix same problem in first year or 12,000 miles • Out of service for at least 30 days in first year/12,000 miles

  19. Consumer Protection for Car Buyers • FTC Used Car Rule- requires used car dealers to inform consumers ahead of purchase about who will be responsible for paying for certain repairs if they occur after the sale • Buyer’s Guide Sticker • As is (buyer pays for all repairs) • Warranty (dealer pays for some repairs for specific time)

  20. Cost of Operating a Car • Gas and Oil • National Average: $3.68 per gallon of unleaded fuel • Highest price in 6 years for early summer • 14.45 ¢ per mile • Depreciation • http://www.edmunds.com/car-buying/how-fast-does-my-new-car-lose-value-infographic.html

  21. Title, Registration, Personal Property Tax, & Sales Tax • Title (Proof you own the vehicle) • 30 days to apply for a title (new car) • $8.50 (title) $2.50 (processing fee) • Registration(registering your vehicle with the state of Missouri) • Pays for your license plate(s) and tags • $3.50 for one year; $7.00 for two years) • Personal Property Tax • A tax which is based upon the value of personal property • Sales Tax • Paid at the time you apply for the title • https://sa.dor.mo.gov/mv/stc/default.aspx Cost of Operating a Car

  22. Cost of Operating a Car • Maintenance and Repairs • Up 11.26% from 2012 (based on a 2013 statement from AAA) • 4.97¢ per mile • Accessories • Window tinting • Different wheels • Audio System

  23. Extending the Life of Your Car • Maintain Fluid Levels • Perform Routine Maintenance • Keep Your Car in a Garage • Preserve the Exterior • Preserve the Interior • Follow Wise Driving Habits

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