P E R S O N A L F I N A N C I A L M A N A G E M E N T P R O G R A M

Car Buying StrategiesCar Buying Strategies

C A R B U Y I N G S T R A T E G I E S 2

AgendaAgenda

•The Three Deals of Car Buying:

– The Purchase

– The Financing

– The Trade-In

•Legal Rights

•The Three Deals of Car Buying:

– The Purchase

– The Financing

– The Trade-In

•Legal Rights

C A R B U Y I N G S T R A T E G I E S 3

Deal #1: The PurchaseDeal #1: The Purchase

Do Your Homework:

How much can you afford?

What type of vehicle do you want?

Where will you buy?

What is a fair price?

Should you lease?

Do Your Homework:

How much can you afford?

What type of vehicle do you want?

Where will you buy?

What is a fair price?

Should you lease?

At the Dealership:

Questions to Ask

Negotiating

Tricks of the Trade

At the Dealership:

Questions to Ask

Negotiating

Tricks of the Trade

C A R B U Y I N G S T R A T E G I E S 4

How much can you afford?How much can you afford?

•Know these key amounts:–Total price you can afford

–Down payment you can afford

–Monthly payment you can afford

•Know these key amounts:–Total price you can afford

–Down payment you can afford

–Monthly payment you can afford

C A R B U Y I N G S T R A T E G I E S 5

Preparing a Spending PlanPreparing a Spending Plan

Financial Planning Worksheet Handout

Financial Planning Worksheet Handout

C A R B U Y I N G S T R A T E G I E S 6

Debt-to-Income RatioDebt-to-Income Ratio

Percent Status

Less than 15% Some additional credit may

be used with caution.

15% - 20% Fully extended.

21% - 30% Overextended.

More than 30% Seriously overextended.

Seek help!

Percent Status

Less than 15% Some additional credit may

be used with caution.

15% - 20% Fully extended.

21% - 30% Overextended.

More than 30% Seriously overextended.

Seek help!

C A R B U Y I N G S T R A T E G I E S 7

Determining Car Payments Handout

Determining Car Payments Handout

Determining Your Car PaymentDetermining Your Car Payment

Your Car Payment Should Be No More Than

25% of Net Income Total

15 % to Payment 10% to M-I-O-T Maintenance Insurance Operating Expenses Taxes

Your Car Payment Should Be No More Than

25% of Net Income Total

15 % to Payment 10% to M-I-O-T Maintenance Insurance Operating Expenses Taxes

C A R B U Y I N G S T R A T E G I E S 8

What Type of Car do you Want?What Type of Car do you Want?

New

– Mechanical Problems - fewer

– Depreciation (10 to 40%)

– Warranties / Extended

Used

– Mechanical Problems - more

– Depreciation - less

– Warranties / “As Is”

New

– Mechanical Problems - fewer

– Depreciation (10 to 40%)

– Warranties / Extended

Used

– Mechanical Problems - more

– Depreciation - less

– Warranties / “As Is”

C A R B U Y I N G S T R A T E G I E S 9

PerformancePerformance

•Consumer Reports Annual Auto Issue (April)

•Internet Websites(See Sources of Help)

– Service

– Repairs

– Safety Ratings

•Consumer Reports Annual Auto Issue (April)

•Internet Websites(See Sources of Help)

– Service

– Repairs

– Safety Ratings

C A R B U Y I N G S T R A T E G I E S 10

What about Insurance?What about Insurance?•Get insurance quotes

•Figure into spending plan

•Raise deductible to lower premium

•Check your credit report

•Avoid lapses in coverage

•Be a safe driver

•Can cost more than car payment!

•Get insurance quotes

•Figure into spending plan

•Raise deductible to lower premium

•Check your credit report

•Avoid lapses in coverage

•Be a safe driver

•Can cost more than car payment!

C A R B U Y I N G S T R A T E G I E S 11

Where will you buy?Where will you buy?

• New Car Dealership

• Used Car Dealership

• Car Buying Service

• Rental Car Agencies

• Bank Repossessions

• Newspaper Classifieds

• Individual Owners

• Internet

• New Car Dealership

• Used Car Dealership

• Car Buying Service

• Rental Car Agencies

• Bank Repossessions

• Newspaper Classifieds

• Individual Owners

• Internet

C A R B U Y I N G S T R A T E G I E S 12

Which Dealership?Which Dealership?

•Years

•Complaints

•Sales Persons

•Mechanics

•References

•Years

•Complaints

•Sales Persons

•Mechanics

•References

Professional Membership

– BBB

– NADA - New

– NIADA - Used

Professional Membership

– BBB

– NADA - New

– NIADA - Used

C A R B U Y I N G S T R A T E G I E S 13

Dealer vs. PrivateDealer vs. Private

Dealer

• Repair Plans

• Cost More

• Some ConsumerProtection

Dealer

• Repair Plans

• Cost More

• Some ConsumerProtection

Private

• No Repair Plans

• Cost Less

• Little Protection

Private

• No Repair Plans

• Cost Less

• Little Protection

•The Internet is a great resource, too!•The Internet is a great resource, too!

C A R B U Y I N G S T R A T E G I E S 14

More Buying OptionsMore Buying Options

Car Buying Services

• Defense Credit Unions

• NFCU

• USAA

• NCOA

• Auto-by-Tel

• Internet Resources

Car Buying Services

• Defense Credit Unions

• NFCU

• USAA

• NCOA

• Auto-by-Tel

• Internet Resources

C A R B U Y I N G S T R A T E G I E S 15

What is a Fair Price?What is a Fair Price?

•Public Library

•NADA Book

•Kelley Bluebook

• Intellichoice

•Consumer Reports

•Edmunds

• Internet

•Public Library

•NADA Book

•Kelley Bluebook

• Intellichoice

•Consumer Reports

•Edmunds

• Internet

What about…

Base Price?

Invoice?

Sticker Price?

Monroney?

Options?

Destination Charge?

C A R B U Y I N G S T R A T E G I E S 16

LeasingLeasing

Leasing vs. Buying Handout

Leasing vs. Buying Handout

C A R B U Y I N G S T R A T E G I E S 17

NegotiatingNegotiating

InformationInformation Trade-InTrade-In Money Down/Deposit

Money Down/Deposit DiscountsDiscounts

Like Car?Like Car? Shop TwinsShop Twins Paying by Cash

Paying by Cash OptionsOptions

Road TestRoad Test Extended WarrantyExtended Warranty

Best Time toBuy

Best Time toBuy

Take Your Time

Take Your Time

180-DegreeTurn

180-DegreeTurn

C A R B U Y I N G S T R A T E G I E S 18

Tricks of the TradeTricks of the Trade

Car Sale Tricks of the Trade Handout

Car Sale Tricks of the Trade Handout

C A R B U Y I N G S T R A T E G I E S 19

Deal #2: The FinancingDeal #2: The Financing

•Where to Finance

•The Cost of Money: Finance Charges

•Contracts

•Common Financing Pitfalls

•Where to Finance

•The Cost of Money: Finance Charges

•Contracts

•Common Financing Pitfalls

C A R B U Y I N G S T R A T E G I E S 20

Where to FinanceWhere to Finance

•Banks/Credit Unions

– Secured loans

•Dealerships

•Finance Companies

•The Internet

•Banks/Credit Unions

– Secured loans

•Dealerships

•Finance Companies

•The Internet

C A R B U Y I N G S T R A T E G I E S 21

Questions to Ask Car Dealers Handout

Questions to Ask Car Dealers Handout

Questions to Ask Car DealersQuestions to Ask Car Dealers

Special Dealer Promotions

and

Low-Interest DealerFinancing

Special Dealer Promotions

and

Low-Interest DealerFinancing

C A R B U Y I N G S T R A T E G I E S 22

The Cost of Money:Finance ChargesThe Cost of Money:Finance Charges

•Interest– Add-on

$1000 for 1 year at 12%: $120.00 finance charge

– Simple

$1000 for 1 year at 12%: $66.19 finance charge

•Usury laws

•Interest– Add-on

$1000 for 1 year at 12%: $120.00 finance charge

– Simple

$1000 for 1 year at 12%: $66.19 finance charge

•Usury laws

C A R B U Y I N G S T R A T E G I E S 23

The Purchase ContractThe Purchase Contract

C A R B U Y I N G S T R A T E G I E S 24

ContractsContracts

Read the Fine PrintRead the Fine Print

Credit/Life andDisability Insurance

Credit/Life andDisability Insurance

Truth-In-Lending

Disclosures

Truth-In-Lending

Disclosures

Taxes, License,Registration,

Title, Processing

Fees

Taxes, License,Registration,

Title, Processing

Fees

PhysicalDamage

Insurance

PhysicalDamage

Insurance

Power of the Pen

Power of the Pen

MechanicalRepair

Coverage

MechanicalRepair

Coverage

Don’t Leave Any

Blanks

Don’t Leave Any

Blanks

Car ProtectionPackages

Car ProtectionPackages

Take to Legal Before

Signing

Take to Legal Before

Signing

C A R B U Y I N G S T R A T E G I E S 25

Common Dealership Financing PitfallsCommon Dealership Financing Pitfalls

• Don’t know your credit rating

• Overspending at dealership

• Don’t know current interest rates

• Not pre-approved for financing

• Assuming zero-percent loan delivers biggest savings

• “Intertwining” the deal

• Too worn out to check the numbers

• Feeling rushed, pressured or confused.

• Don’t know your credit rating

• Overspending at dealership

• Don’t know current interest rates

• Not pre-approved for financing

• Assuming zero-percent loan delivers biggest savings

• “Intertwining” the deal

• Too worn out to check the numbers

• Feeling rushed, pressured or confused.

C A R B U Y I N G S T R A T E G I E S 26

Deal #3: The Trade-inDeal #3: The Trade-in

•Trading vs. selling outright

•What is a fair price?

•What is dealer willing to pay?

•What if you owe more than it’s worth?

•Trading vs. selling outright

•What is a fair price?

•What is dealer willing to pay?

•What if you owe more than it’s worth?

C A R B U Y I N G S T R A T E G I E S 27

Legal RightsLegal Rights

•State Lemon Law

•Consumer Leasing Act

•Odometer Reading

•Used Car Buyer’s Guide “As Is” vs. Implied/Expressed Warranty

•Magnuson-Moss Warranty Act

•State Auto Repair Facilities Act

•State Lemon Law

•Consumer Leasing Act

•Odometer Reading

•Used Car Buyer’s Guide “As Is” vs. Implied/Expressed Warranty

•Magnuson-Moss Warranty Act

•State Auto Repair Facilities Act

C A R B U Y I N G S T R A T E G I E S 28

Complaint ResolutionComplaint Resolution

•Dealer/Point of Sale

•Regional Manufacturer’s Representative

•Professional Associations

•State Attorney General/Office of Consumer Affairs

•Armed Forces Disciplinary Control Board

•Dealer/Point of Sale

•Regional Manufacturer’s Representative

•Professional Associations

•State Attorney General/Office of Consumer Affairs

•Armed Forces Disciplinary Control Board

C A R B U Y I N G S T R A T E G I E S 29

Sources of HelpSources of Help

Sources of Help Handout

Sources of Help Handout

C A R B U Y I N G S T R A T E G I E S 30

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Car Buying Strategies