CAR BUYINGCAR BUYING

90% of people in our 90% of people in our culture purchase things culture purchase things

they can’t affordthey can’t afford..

To impress people they do not To impress people they do not like. like.

Don’t be one of them! Don’t be one of them! Especially when you are Especially when you are buying a car.buying a car.

Purchasing a CarPurchasing a Car

Step 1Step 1 Determine your needs:Determine your needs: Ask yourself – how are you going to use Ask yourself – how are you going to use

this car?this car? How many people do you really want to How many people do you really want to

drive around?drive around? Safety features, Gas mileage, Automatic Safety features, Gas mileage, Automatic

transmission… transmission…

Purchasing a Car Cont.Purchasing a Car Cont.

Step 2 How much can you afford?Step 2 How much can you afford? How much do you make? ____________How much do you make? ____________ Assume you made $15 dollars an hour Assume you made $15 dollars an hour

and worked 40 hours a week and your and worked 40 hours a week and your Federal income and State sales taxes Federal income and State sales taxes equaled 30% of your gross income.equaled 30% of your gross income.

The Real Numbers The Real Numbers Budgeting Safe PercentagesBudgeting Safe Percentages Charitable Gifts 10-Charitable Gifts 10-

15%15% Savings 5-10%Savings 5-10% Housing 25-35%Housing 25-35% Utilities 5-10%Utilities 5-10% Transportation Transportation

10-15%10-15%

Food 5-15%Food 5-15% Clothing 2-7%Clothing 2-7% Medical/Health 5-Medical/Health 5-

10%10% Personal 5-10%Personal 5-10% Recreation 5-10%Recreation 5-10% Debt 5-10%Debt 5-10%

Take your net income and multiply that by .15=________ this is what you have to work with.

Things to watch out forThings to watch out for

Did you know that Did you know that banks are poised to banks are poised to offer you offer you approximately 30% approximately 30% of your gross of your gross income in the form income in the form of a car loan.of a car loan.

Why????Why????

Affording the CarAffording the Car

Save up until you can purchase with Save up until you can purchase with cash.cash.

Take out a personal loanTake out a personal loan Finance through the car companyFinance through the car company Lease the car with out a down Lease the car with out a down

payment.payment. Mom and Dad buy it.Mom and Dad buy it.

To Get A Car LoanTo Get A Car Loan

You need to have a past credit historyYou need to have a past credit history

oror

You need to have someone You need to have someone co-sign. co-sign. Someone who is willing to guarantee Someone who is willing to guarantee your ability to pay off the loan. If you your ability to pay off the loan. If you fail to pay they are legally responsible fail to pay they are legally responsible for the sum of the loan and will have for the sum of the loan and will have to pay it in full.to pay it in full.

Purchasing a Car Cont.Purchasing a Car Cont.

Step 3Step 3 Do your research at homeDo your research at home

Use Consumer Reports to determine what Use Consumer Reports to determine what cars meet your needscars meet your needs

Use Kelley Blue Book to determine the value Use Kelley Blue Book to determine the value of the cars you have selectedof the cars you have selected

Use Safercar.gov to see if there has been a Use Safercar.gov to see if there has been a recall on your car or if there are a large recall on your car or if there are a large amount of consumer complaints amount of consumer complaints

Purchasing a Car Cont.Purchasing a Car Cont.

Now where?Now where? Look online at various dealers and Look online at various dealers and

prices on the vehicles that you want prices on the vehicles that you want to drive. Look at AutoTrader.com to drive. Look at AutoTrader.com and Craigslist.and Craigslist.

Talk to friends, mechanics and Talk to friends, mechanics and owners of the same type of car but owners of the same type of car but do not feel obligated.do not feel obligated.

Car Fax - Step 3Car Fax - Step 3

Enter the VIN (vehicle identification Enter the VIN (vehicle identification number) number) http://vin.carfax.com

This will give you the history of the This will give you the history of the vehicle you are interested in.vehicle you are interested in.

Ready to Buy?Ready to Buy?

Check out Check out http://www.edumunds.com/tco.htmlhttp://www.edumunds.com/tco.html

To find the true cost of the car you To find the true cost of the car you want to purchase. Edmunds will want to purchase. Edmunds will compute car maintenance, fuel, compute car maintenance, fuel, insuranceinsurance, taxes and more. , taxes and more.

Make sure you check if your new car Make sure you check if your new car changes your insurance rate.changes your insurance rate.

But I Really Want a New But I Really Want a New

The sales associate suggested The sales associate suggested leasing as a way to get into a new leasing as a way to get into a new car with out all the risks. car with out all the risks.

Do the MathDo the Math

New cars paid with cash results in $82.00 New cars paid with cash results in $82.00 profitprofit

New cars financed result in $775.00 New cars financed result in $775.00 profitprofit

New cars leased result in $1,300.00 New cars leased result in $1,300.00 profitprofit

What would you sell?! What would you sell?!

Do the MathDo the Math The Break Down The Break Down

If you (rent) lease a car with a value of If you (rent) lease a car with a value of $22,000 for three years, and then turn it $22,000 for three years, and then turn it in the car is only valued at $10,000, in the car is only valued at $10,000, someone has to cover the $12,000 loss. someone has to cover the $12,000 loss.

Your lease payments are designed to Your lease payments are designed to cover the $12,000 in 36 months plus a cover the $12,000 in 36 months plus a profit this will equal over $333.00 a profit this will equal over $333.00 a month. month.

Bargain?!?! Bargain?!?!

Did You Know? Did You Know?

The Auto Industry does not have to The Auto Industry does not have to disclose the amount of interest they are disclose the amount of interest they are charging you with a lease.charging you with a lease.

This is usually monitored by the FTC but This is usually monitored by the FTC but they don’t have the power here because they don’t have the power here because you are “renting” not purchasing your you are “renting” not purchasing your car. car.

The average leasing interest rate is 14%The average leasing interest rate is 14%

Don’t Forget the Tiny NumbersDon’t Forget the Tiny Numbers

If you go over the allotted miles you If you go over the allotted miles you are charged around 10-17 cents a are charged around 10-17 cents a mile. mile.

Excessive wear and tear will penalize Excessive wear and tear will penalize you too. Option to purchase fee, doc you too. Option to purchase fee, doc fee, tire fee and the early fee, tire fee and the early termination fees.termination fees.

To Keep You Coming Back!To Keep You Coming Back!

Dealerships will offer to roll in the Dealerships will offer to roll in the charges for your last car into a brand charges for your last car into a brand new “beauty”, for only an extra new “beauty”, for only an extra $13.00 a month…What a deal…$13.00 a month…What a deal…

The ExcusesThe Excuses

It Comes with a WarrantyIt Comes with a Warranty Some people want to buy or lease a new Some people want to buy or lease a new

car for the warranty. car for the warranty. Consumer Reports conducted a study and Consumer Reports conducted a study and

found 55% of those that purchased an found 55% of those that purchased an extended warranty did not use it during extended warranty did not use it during the lifetime of the warranty.the lifetime of the warranty.

Among survey participants who used their Among survey participants who used their policy, the median out-of-pocket savings policy, the median out-of-pocket savings on repairs covered by extended warranties on repairs covered by extended warranties for all brands was $837. Based on a for all brands was $837. Based on a $1,214 average initial cost, that works out $1,214 average initial cost, that works out to a net loss of more than $375.to a net loss of more than $375.

The Price of, peace of mind. If The Price of, peace of mind. If you do buy an extended you do buy an extended

warranty make sure you… warranty make sure you… Don’t buy under pressure.Don’t buy under pressure. Dealers Dealers

often try to sell the convenience of often try to sell the convenience of rolling coverage into a new-car loan, rolling coverage into a new-car loan, but that means you may be paying up but that means you may be paying up front for coverage that you already front for coverage that you already have with the factory warranty. have with the factory warranty.

Don’t be afraid to bargain. Don’t be afraid to bargain. You can save about $325 on average.You can save about $325 on average.

Go all in.Go all in. There is little difference in There is little difference in cost between limited and bumper-to-cost between limited and bumper-to-bumper coverage, which is more likely bumper coverage, which is more likely than powertrain plans to include than powertrain plans to include reimbursement for towing, travel reimbursement for towing, travel expenses, and a rental car. If you’re expenses, and a rental car. If you’re going to buy, get the full protection.going to buy, get the full protection.

Read the small print.Read the small print. Before Before signing, be sure you understand what signing, be sure you understand what is covered and where you can take is covered and where you can take your car for authorized service. your car for authorized service.

It is saidIt is said

The car payment is the curse of the The car payment is the curse of the middle class. How about trying middle class. How about trying something different?something different?

SourcesSources

Created By: Chantel SukrawCreated By: Chantel Sukraw Dave Ramsey’sDave Ramsey’s

Total Money MakeoverTotal Money Makeover Financial Peace Financial Peace

Bank of AmericaBank of America http://www.bankrate.comhttp://www.bankrate.com Kiplinger reportKiplinger report http://www.consumerreports.org/cro/magazine/http://www.consumerreports.org/cro/magazine/

2014/04/extended-warranties-for-cars-are-an-2014/04/extended-warranties-for-cars-are-an-expensive-game/index.htmexpensive-game/index.htm