Adding a new car to your household

Topics covered

Decision Making Process

Get Finanically prepared

Questions about process of buying a car:

Matthew Fryer. Autoproxy

What is the problem

NEEDS

To be within her price range

Easy to maintain

Needs to last her atleast 5 years

Car that is fuel efficent

WANTS

To have a car that is cute and she looks good in

She wants a great sounds system

She likes heated seats

She would like a hatchback or a small compact car

Financial preparednessUnderstand the costs of having a car

What do you do with your existing car

Budget

Get ready for the monthly payment

Know how much it cost to have the car

ownership (fixed) costs:

Depreciation (based on purchase price) Interest on loan (if buying on credit)

Insurance

Registration fee, license, taxes, GST

Service contract (if purchased) operating (variable) cost

OPERATING THE CAR(VARIABLE)

operating (variable) costs:

Gasoline Oil and other fluids

Tires

Maintenance and repairs

Parking and tolls

Tickets

FIXED COSTS

What to do with your existing car

Leasing or Buy?

Smaller initial outlay than down payment when buying on credit

How much can you spend

Meet Rose Rose is a college student. She has just started to go to school she is working part time(20 hours a month) and going to school. She wants her car to last her for the next 4 years of university and the first year while working. Once she has been working for a bit, she wants to save before buying another car..

Rose wants to buy a car

She has $1,000 saved for a down payment.

Rose makes 1300 each month

Fixed cost (rent and credit payments): 324

Flexible costs (Savings and day to day costs) each month 559

She currently does not have a car. She takes the bus for transportation $165

Extra money to pay for emergency $50 aside each month

How much extra money does Rose have

SALARY

Monthly salary 1300

Yearly salary 15,600

EXTRA MONEY

$202 left to play with(1300-324-559-165-50

New Car expenses$60 gas and oil per month

$30 parking and bridges per month

$175 Car insurance

Total additional cost added for having this car per year

$1255

Getting a loan: get prepared

Why get a loan

ADVANTAGES

Able to buy needed items now

Don’t have to carry cash

Creates a record of purchases

More convenient than writing cheques

Consolidates bills into one payment

Emergencies

DISADVANTAGES

Interest (higher cost of items)

May require additional fees

Financial difficulties may arise if one loses

track of how much has been spent each month

Increased impulse buying may occur

Rule for Credit

20% RULE

never borrow more than 20% of your yearly net income 0 Rule

10% RULE

monthly payments shouldn’t exceed 10% of your monthly net income:

Meet Rose Rose is a college student. She has just started to go to school she is working part time and going to school. She wants her car to last her for the next 4 years of university and the first year while working. Once she has been working for a bit, she wants to save before buying another car.

Rose wants to buy a car

She has $1,000 saved for a down payment.

Rose makes 1300 each month

Fixed cost (rent and credit payments): 324

Flexible costs (Savings and day to day costs) each month 559

She currently does not have a car. She takes the bus for transportation

Extra money to pay for emergency $100 aside each month

RoseHow much loan can Rose get as a loan

Salary 1300x12=$15,600

20% $3,120

Rose

Monthly payment $1300

10% 130 each month

Plan ahead

$50 dollars each month

1 year: 600

2 year 1200

3 year 1800

What impacts your credit score

What factors play into your credit score

Character

Capacity

Capital

Getting a loanINCORRECT

CORRECT

HOW DOES MY CAR LOAN TERM LENGTH AFFECT MY INTEREST CHARGES?

How to get a good credit score

Steps for Buying a Car

Step 1. Do your homeworkStep 2. Test drive the carStep 3. Consider your optionsStep 4. Check the price guides* Second test driveStep 5. Negotiate

Thank You