1.16.2.g1 © family economics & financial education – revised december 2004 – transportation...

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

DO NOW TERMS1. M.S.R.P.2. NEGOTIATED PRICE 3. DOWN PAYMENT4. EXTENDED SERVICE CONTRACT5. “BLUE BOOK” VALUE

Researching an Automobile

What should I look for?

http://www.jdpower.com/consumer-ratings/automotive/index.htm

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Car and driver best cars for 2013

http://www.youtube.com/watch?v=Q2Q2G54dCpA

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Best of the Detroit Auto Show Highlights from the 2013 North

American International Auto Show

http://www.bing.com/videos/watch/video/best-of-the-detroit-auto-show/tbhhdo2

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Transportation Part of everyone’s life 15 – 20% of an

individual’s budget Automobile tends to be

the 2nd most expensive purchase, only after a home

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Want to Buy a Vehicle? Consumers should plan their

vehicle purchase to avoid any costly mistakes

Any large purchases should be planned

Places to purchase a vehicle:•Dealership, private owner, internet

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Planned Buying Process

for automobiles

1. Prioritizing wants2. Pre-shopping research3. Fitting the budget4. Comparison shopping5. Negotiating6. Making the decision7. Evaluating the decision

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Step 1 - Prioritizing Wants

Assess transportation needs and wants•Need: something thought to be a necessity

•Want: something unnecessary but desired Consider all automobile options as

wants•Prioritize the wants from low to high priority

•Consider costs and benefits of different vehicle options

•Consider the “big picture” of the vehicle purchase rather than a specific want (such as heated seats, color, engine size, etc)

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Prioritizing Wants – Questions to Think About

How will the vehicle be used? Where will the buyer be living? How will the vehicle be stored or

parked? How much will it be driven? What options would the buyer

like in the vehicle? Celebs and their cars:

http://www.youtube.com/watch?v=obN5a2Afmf4

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Step 2 – Pre-shopping Research

Research should be based on transportation wants

Complete this before visiting a car dealership or salesman

Helps the buyer to be informed about:•What they are looking for

•Vehicles in their price range

•Available options

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Ways to Perform the Research

Family & friends•Experiences with

different makes and models of different vehicles

•Likes, dislikes, and recommendations

Online Research•Consumer Reports

•Federal Citizen Information Center

•Kelley Blue Book

•Motor Trend

•Car and Driver

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Price Research Base price: vehicle price with

standard equipment, no extra options

MSRP: Manufacturer’s suggested retail price•Includes base price, price of options

installed by manufacturer, and their transportation charge

Sticker Price•Dealer’s initial asking price

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Price Research continued

Determine how much a dealer paid to help decide which vehicles to consider and to negotiate a fair price•Consumer Reports, Kiplinger’s Personal

Finance magazine, and Edmund’s New Car Prices

Used cars•Blue book price: dollar value given to

the vehicle based on its year and model

•Used as a guide for dealers & banks for pricing trade-ins•Kelley Blue Book

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Vehicle Options Research

General type of vehicle•Car: luxury, compact, sedan, subcompact, truck,

SUV, sports car Make and model

•Ford Explorer, Honda Accord, Nissan Altima Safety

•Braking and emergency handling, airbags Reliability

•Some specific models have high marks, may be higher priced but will save on repair costs

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Vehicle Options Research (continued)

Fuel economy•Type of gas used, gas mileage

Power and performance•Driving on highways, steep hills,

mountains, snow, muddy roads, or in a city

Comfort and convenience•Size of headroom and legroom, cargo

space

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Vehicle Options Research (continued)

Insurance•Chosen vehicle affects the price of

insurance; obtain a quote for the vehicles being considered

Other options•Power steering and brakes, manual or

automatic, air conditioner, rear-window defogger, radio/tape/CD player, type of tires, cruise control, sun roof, heated seats, power door locks and windows, etc.

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

New vs. Used Research New Vehicle:

•Not pre-owned

•Warranty

•Manufacturer options

•Wide selection

•Expensive

•Depreciation•Loss in the vehicle’s

value due to time and use (greatest cost)

Used Vehicle:•Cost less to buy

•Cost less to insure

•Avoid rapid deprecation

•Wide selection

•May offer warranty

•Returned leased cars

•Have an independent mechanic inspect any used car before purchase

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Step 3 – Fitting the Budget

“Can I afford it? - Most important question Amount the buyer can afford in his/her budget

dictates the vehicle price All costs must be taken into consideration

before choosing a vehicle For those that enjoy owning a vehicle for a

long time without fear of excess mileage or wear and tear, purchasing is the best option.

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Buying VS. Leasing The benefits to either are based on your unique needs. The leasing option is great for those that want to drive a

more expensive car for a lower monthly car payment without worrying about vehicle depreciation.

•Leasing has two principal benefits:

• (1) You can drive a newer vehicle that is always under warranty and seldom needs more than routine maintenance,

• (2) you can often get a larger, more luxurious, better-equipped car.

•Owe a down payment, and a monthly payment for the lease term (usually 3 or 4 years)

•http://www.youtube.com/watch?v=sgtEI_cc22U

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Fitting the Budget continued

Fixed expenses•Depreciation

• Insurance costs

•Loan payment and interest if financed

•Parking fees

•Licensing

•Registration

Flexible expenses•Maintenance

•Gas

•Oil

•Repairs

*Vehicle price is not the only cost involved

Stop to complete activity

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

DO NOW TERMS….

1. AMOUNT FINANCED2. APR 3. FINANCE CHARGE4. MONTHLY PAYMENT AMOUNT

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Planned Buying Process

for automobiles

1. Prioritizing wants2. Pre-shopping research3. Fitting the budget4. Comparison shopping5. Negotiating6. Making the decision7. Evaluating the decision

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Step 4 – Comparison Shopping

Goal of comparison shopping:•Narrow the choice even further to negotiate for the best

deal Comparing services or products to determine the

best buy or quality product at a fair price Allows the consumer to build upon the information

learned in the pre-shopping research

*As the price of a vehicle increases, consumers are often not buying additional safety, capacity, or power, but instead style and prestige

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Comparison Shopping continued

Narrow the choices to a few specific makes and models with desired options

Visit the appropriate store to learn more information about each choice to make comparisons•Inquire about price, dealer incentives,

financing options, leasing, warranties, and service contracts

Test drive each potential vehicle

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Step 5 - Negotiating Process of deciding the actual terms of

the purchase and agreement between the seller and buyer

Obtain a firm price before discussing any other aspects including a trade-in

Compare prices from different dealers•Let them know you have done your research

and whether their price is high

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Negotiating continued Keys to all negotiations

•Be able to say NO

•Take the purchase to another business

•Always know the BLUE BOOK Value

•NEVER tell the salesperson a monthly rate you’re willing to pay. Tell them the Max you’re willing to borrow!

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Step 6 – Making the Decision

NEVER PAY MORE THAN YOUR ORIGINAL BUDGET – forget about monthly payment

The best place to decide on which vehicle to purchase is NOT the showroom where you are around the dealer•Take the information home to compare all options

After making the decision, return to the dealer to close the sale

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Step 7 – Evaluating the Decision

Think about the things which went well and what did not•This will be helpful the next time a similar purchase

is made If the process was successful and you are

happy, compliment the seller If you have a complaint, make the complaint

known to the seller then move to the supervisor if necessary

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Lemon Laws Lemon – only applies to new cars

•A vehicle in and out of the repair shop with problems monthly

•Defect remains unfixed after four repair attempts or the vehicle remains in the repair shop for a total of 30 days

An estimated new 150,000 vehicles sold each year are lemons.

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Lemon Laws continued To fall under the lemon law

•New vehicle must have a substantial defect which cannot be fixed in a reasonable time

•Defect remains unfixed after four repair attempts or the vehicle remains in the repair shop for a total of 30 days

This allows the consumer the right to a refund or a new vehicle

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Lemon Laws continued What should you do if you feel you

have purchased a lemon?•Contact the state’s attorney general

office to request information on the state’s lemon laws and how to use them if they have purchased a lemon

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

WARRANTYIf you buy a new car or a certified pre-

owned car, inorder to qualify for warranty promises,

you mustfollow the manufacturer’s

requirements:•Example – Nissans, you must get oil

changes from a Nissan Dealer every 4,ooo miles

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© Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an AutomobileFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

ConclusionBefore purchasing a vehicle, follow the

planned buyingprocess to avoid a costly mistake

1. Prioritize wants2. Pre-shopping research3. Fit the budget4. Comparison shop5. Negotiate6. Make the decision7. Evaluate the decision