buying, financing and maintaining a car

78
Buying, Financing and Maintaining a Car Presented by the Delaware Bankruptcy Inn of Court

Upload: latham

Post on 22-Jan-2016

45 views

Category:

Documents


0 download

DESCRIPTION

Buying, Financing and Maintaining a Car. Presented by the Delaware Bankruptcy Inn of Court. Presentation:. BASIC BUDGETING BUYING A NEW CAR BUYING A USED CAR LEASING WARRANTIES, SERVICE CONTRACTS & INSURANCE FINANCING REPOSSESSION AUTO REPAIR FUEL. Basic Budgeting. Basic Budgeting. - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: Buying, Financing and Maintaining a Car

Buying, Financing and Maintaining a Car

Presented by the Delaware

Bankruptcy Inn of Court

Page 2: Buying, Financing and Maintaining a Car

Presentation:

• BASIC BUDGETING

• BUYING A NEW CAR

• BUYING A USED CAR

• LEASING

• WARRANTIES, SERVICE CONTRACTS & INSURANCE

• FINANCING

• REPOSSESSION

• AUTO REPAIR

• FUEL

Page 3: Buying, Financing and Maintaining a Car

Basic Budgeting

Page 4: Buying, Financing and Maintaining a Car

Basic Budgeting

• THERE ARE THREE WAYS TO CHOOSE A CAR:

– Buy a new car • Most expensive.• Lower maintenance costs.• Longer-term financing with lower interest rate.

– Buy a used car • Less expensive.• May require more maintenance.• Shorter-term financing with higher interest rate.

– Lease a car • Monthly lease payments are generally lower than

monthly finance payments on the same vehicle.• Cars are usually new and require minimal

maintenance.• Once lease ends, lessee will have nothing.

• YOUR CHOICE SHOULD BE BASED ON:– Your personal needs; and– What you can afford.

Page 5: Buying, Financing and Maintaining a Car

Basic Budgeting

• YOUR PERSONAL NEEDS:

– Manual / Automatic

• Manual cars are less expensive and can get better fuel economy, but can be harder to resell.

• Automatic cars may be better for driving in heavy traffic.

– All-wheel / Front wheel

• All-wheel drive cars handle better in snowy weather.

• Front wheel drive cars get better fuel economy.

– Space

• Smaller cars get better fuel economy and are easier to park.

• Larger cars may be better if you have multiple passengers and / or carry cargo in your car.

– Pick a car based on your needs, not your wants.

Page 6: Buying, Financing and Maintaining a Car

Buying a New Car

Page 7: Buying, Financing and Maintaining a Car

Buying a New Car

• KEYS TO BUYING A NEW CAR:

– Know what you can afford.

– Know what you want in advance.

– Do your research.

– Negotiate.

– Trade-in tips.

– Know the language.

Page 8: Buying, Financing and Maintaining a Car

Buying a New Car

• DETERMINE HOW MUCH YOU CAN AFFORD:– Are your current monthly living expenses

covered?

– Can you afford to take on a new monthly payment?

– Consider other financial goals or priorities.

• KNOW WHAT YOU WANT IN ADVANCE:

– Car model;

– Options;

– How much would you like to spend?

Page 9: Buying, Financing and Maintaining a Car

Buying a New Car

• DO YOUR RESEARCH:

– Check publications / websites that discuss car features and prices.

• Examples: Newspapers, Consumer Reports, www.edmunds.com

– Compare models and prices in ads and at dealer showrooms.

– Contact car-buying services to make comparisons.

• NEGOTIATE:

– Dealer profit margin is usually 10 – 20%.

– Order your car if it is not on the dealer’s lot to avoid paying for extra options.

– OR negotiate a good deal on a car that is on the lot if the dealer wants to get rid of inventory.

Page 10: Buying, Financing and Maintaining a Car

Buying a New Car

• TRADING IN YOUR OLD CAR:

– First, research the value of your old car.

– Second, negotiate the best possible price for your new car.

– Third, discuss the possibility of trading in your old car.

– Remember:• It may take you longer to sell your old

car yourself.• However, you will generally get more

money for it than if you trade it in.

Page 11: Buying, Financing and Maintaining a Car

Buying a New Car

• TRADING IN YOUR OLD CAR:

– Beware of special promotions advertising high trade-in allowances:

• Does the trade-in allowance apply to all cars, regardless of their condition?

• Will the cost of the new car go up as the trade-in allowance goes up?

• Does the dealer have cars in stock that have no expensive options?

• Are the special offers available if you order a car instead of buying one off the lot?

• Read the fine print.

Page 12: Buying, Financing and Maintaining a Car

Buying a New Car

• NEW CAR LANGUAGE:

– Invoice Price manufacturer’s initial charge to the dealer; generally includes freight.

– Base Price cost of the car without options, but includes standard equipment and factory warranty.

– Monroney Sticker Price (MSRP) label affixed to car window that shows base price, manufacturer’s installed options with suggested retail price, manufacturer’s transportation charge, and fuel economy (mileage).

– Dealer Sticker Price MSRP + suggested retail price of dealer-installed options.

Page 13: Buying, Financing and Maintaining a Car

Buying a Used Car

Page 14: Buying, Financing and Maintaining a Car

Buying a Used Car

• KEYS TO BUYING A USED CAR:

– Follow many of the same steps you would take when buying a new car:

• Determine what you can afford.

• Know what you want in advance.

• Do your research.

• Negotiate.

– Perform your own inspection and hire an independent mechanic to perform an inspection of the car.

– Familiarize yourself with the terms of the Buyer’s Guide.

Page 15: Buying, Financing and Maintaining a Car

Buying a Used Car

• THINGS TO CONSIDER IN YOUR RESEARCH:

– What are the crash test ratings?

– What do current owners have to say about it?

– What is the annual maintenance cost?

– What kind of warranty is still available?

– What is the cost of yearly insurance?

Page 16: Buying, Financing and Maintaining a Car

Buying a Used Car

• INSPECTION:

– Examine the car yourself using an inspection checklist that can be found online.

– Test drive the car under varied road conditions.

– Ask for the car’s maintenance record.

– Talk to the previous owner.

– Have the car inspected by a mechanic you hire.

Page 17: Buying, Financing and Maintaining a Car

Buying a Used Car

• WHAT IS THE BUYER’S GUIDE?

– Informs buyers of important information about the car.

– Becomes part of the sales contract and overrides any contrary provisions.

– Must reflect any negotiated changes in warranty coverage.

– Dealers who sell 6 or more cars per year are required to post it in every used car they offer for sale.

Page 18: Buying, Financing and Maintaining a Car

Buying a Used Car

• CONTENTS OF THE BUYER’S GUIDE:

– What portion of the repair cost will the dealer pay;

– What parts and systems are covered by warranty;

– What is the warranty length for each covered system; and

– Is there a deductible, and if so, how much?

Page 19: Buying, Financing and Maintaining a Car

Buying a Used Car

• PRIVATE, NON-DEALER SALES:

– Purchase is usually on an “as is” basis; buyer must pay for any problems that occur after the sale.

– Ask seller if you can have vehicle inspected by your mechanic, either at seller’s location or at mechanic’s shop.

– Use Buyer’s Guide’s list of car’s major systems as a shopping tool.

– Ask to review car’s warranty or service contract. Car may be covered by manufacturer’s warranty or a purchased service contract.

Page 20: Buying, Financing and Maintaining a Car

Buying a Used Car

• DEALER SALES: Types of Cars

– Pre-owned cars

– Program cars low-mileage, current-model-year vehicles returned from short-term leases or rentals

– Demonstrators new cars that have not been owned, leased, or used as rentals, but have been driven by dealer staff

Page 21: Buying, Financing and Maintaining a Car

Buying a Used Car

• DEALER SALES: RESEARCH

– Assess the dealer’s reputation with friends and relatives, state Attorney General, Better Business Bureau, and Google searches.

– Ask about dealer’s return policy, get it in writing, and read it carefully.

– Review Buyer’s Guide posted in every used car.

Page 22: Buying, Financing and Maintaining a Car

Leasing

Page 23: Buying, Financing and Maintaining a Car

Leasing

• LEASE vs. PURCHASE:

– No ownership.

– Monthly payments are usually lower.

– Annual mileage limits (usually 12,000 – 15,000).

– Lease terms are usually 2-4 years.

– At lease-end, you may return the car, pay remaining costs, and walk away.

– Lessor bears the risk of the car’s future market value.

– Auto insurance usually costs more.

Page 24: Buying, Financing and Maintaining a Car

Leasing

• KEYS TO LEASING A CAR:

– Shop as if you are buying a car by negotiating all lease terms.

– Make sure the manufacturer’s warranty covers the entire lease term.

– Ask about extra charges for excessive mileage, wear and tear, and early termination.

– Before you sign a lease, take a copy of the contract home and review it carefully away from any dealer pressure.

– Obtain lease cost information from the lessor before signing the lease.

Page 25: Buying, Financing and Maintaining a Car

Leasing

• LEASING LANGUAGE:– Closed-end lease return the car at the

end of the lease and “walk away.”

– Open-end lease pay the difference between the value stated in your contract and the lessor’s appraised value at the end of the lease.

– Lease inception fees payments you must make when the lease starts.

– Capitalized cost price of the car for leasing purposes plus taxes and extra charges like service contracts and registration fees.

– Capitalized cost reduction similar to a down payment; if you are trading in a car, make sure the dealer applies the trade-in value to the price your lease is based on.

Page 26: Buying, Financing and Maintaining a Car

Leasing

• BEGINNING-OF-LEASE COSTS (Lease Inception Fees):

– First monthly payment;

– Refundable security deposit or your last monthly payment;

– Fees for licenses, registration, and title;

– Capitalized cost reduction (like a down payment);

– Acquisition / processing fee;

– Freight or destination charges; and

– State or local taxes.

Page 27: Buying, Financing and Maintaining a Car

Leasing

• MONTHLY LEASING COSTS:

– Monthly payment;

– Additional taxes not included in the payment (sales, use, and personal property taxes);

– Insurance premiums;

– Ongoing maintenance costs;

– Fees for late payments;

– Safety and emissions inspections; and

– Early termination charges, if applicable.

Page 28: Buying, Financing and Maintaining a Car

Leasing

• END-OF-LEASE COSTS:

– If you don’t buy the vehicle, you may have to pay:

• Disposition fee;

• Charges for excess miles;

– Dealers may charge $0.15 to $0.20 for every mile that exceeds the limit.

• Charges for excessive wear, such as body damage and worn tires; and

• Early termination charges for ending the lease early.

Page 29: Buying, Financing and Maintaining a Car

Leasing

• NEGOTIATING POINTS:

– Agreed-upon value of the vehicle;

– Up-front payments;

– Length of lease;

– Monthly lease payment;

– End-of-lease fees and charges;

– Mileage allowed and per-mile charges for excess;

– Option to purchase at lease-end or earlier; and

– “Gap” coverage to protect in case of car being totaled or stolen.

Page 30: Buying, Financing and Maintaining a Car

Leasing

• KNOW YOUR RIGHTS:

– To use the car for agreed-upon number of months and miles;

– To turn in vehicle at lease-end, pay end-of-lease fees and charges, and walk away;

– To buy the car if you have a purchase option; and

• NOTE: If you buy the car once your lease has expired, it will cost more than if you had bought the car new instead of entering into the lease.

– To take advantage of any warranties, recalls, or other services that apply to the car.

Page 31: Buying, Financing and Maintaining a Car

Warranties, Service Contracts & Insurance

Page 32: Buying, Financing and Maintaining a Car

Warranties

• TYPES OF WARRANTIES:

– As-Is No warranty. Buyer is responsible for anything that goes wrong with the car.

– Implied Warranties Unspoken, unwritten promises; never expire.

– Express (Written) Warranties Full or limited; coverage can be negotiated.

• NOTE: Implied warranties are included automatically.

– Unexpired Manufacturer’s Warranties • Ask the dealer for the warranty documents. • Call the manufacturer’s zone office to verify

the information.

Page 33: Buying, Financing and Maintaining a Car

Warranties

• IMPLIED WARRANTIES:

• Merchantability Seller promises that the car will do what it is supposed to do.

– Applies only to the basic functions of a car.

– Breach occurs only if the buyer can prove that a defect existed at the time of sale.

• Fitness for a Particular Purpose Buyer buys car based on dealer’s advice that it is suitable for a particular use.

– Example: A dealer who suggests you buy a specific car for hauling a trailer is promising that the car will be suitable for that purpose.

Page 34: Buying, Financing and Maintaining a Car

Warranties

• EXPRESS WARRANTIES:

– Full Warranty

• Anyone who owns the car during the warranty period is entitled to service.

• Service will be provided free of charge, including costs to remove and reinstall a covered system.

• You have the choice of a replacement or a full refund if the dealer cannot repair the covered system after a reasonable time.

– Limited Warranty

• If any of the statements regarding full warranties do not apply, the warranty is limited.

Page 35: Buying, Financing and Maintaining a Car

Warranties

• UNEXPIRED MANUFACTURER’S WARRANTIES:

– Must specify the percentage of the repair cost that the dealer will pay;

– Lists the specific parts and systems that are covered by the warranty;

– Includes the warranty term for each covered system; and

– States whether there is a deductible, and if so, how much.

Page 36: Buying, Financing and Maintaining a Car

Warranties

• AVOIDING WARRANTY SCAMS:

– If you get mail or phone calls about renewing your warranty, do not take the information at face value.

– Take your time. Most legitimate businesses will give you time and written information before asking you to commit to a purchase.

– Never give out personal financial or other sensitive information (including your driver’s license number or VIN number) unless you know who you are dealing with.

– Be skeptical of any unsolicited sales calls if the call is a recorded message or your phone number is on the Do Not Call Registry.

Page 37: Buying, Financing and Maintaining a Car

Service Contracts

• WARRANTIES v. SERVICE CONTRACTS:

– Both provide repair and/or maintenance for a specific period.

– Warranties are included in the price of the product.

– Service contracts, a.k.a. “Extended Warranties,” cost extra, are sold separately, and may be arranged at any time. They provide optional protection on specified mechanical and electrical components of the car available for purchase to supplement any warranty coverage period with the new or used vehicle.

Page 38: Buying, Financing and Maintaining a Car

Service Contracts

• CONSIDER WHETHER A SERVICE CONTRACT IS A GOOD BUY FOR YOU:

– Does it duplicate warranty coverage?

– Does it extend beyond the time you expect to own the car?

– Is it transferable / is a shorter service contract available?

– Will the cost of repairs exceed the price of the contract?

– What parts and systems are covered?

– Is a deductible required? If so, what are the amount and terms of the deductible?

– Are there cancellation or transfer fees?

– Who backs the service contract, and are they reputable?

Page 39: Buying, Financing and Maintaining a Car

Insurance

• Credit Insurance – Optional insurance that pays the scheduled unpaid balance of your car loan if you die or become disabled.

• Guaranteed Auto Protection (GAP) – Optional protection that pays the difference between the amount you owe on your vehicle and the amount you receive from your insurance company if your car is stolen or destroyed before you have satisfied your credit obligation.

Page 40: Buying, Financing and Maintaining a Car

Financing

Page 41: Buying, Financing and Maintaining a Car

Financing

• FINANCING OVERVIEW:

– Financing Tips

– Financing Terms

– Step-by-Step Guide to Financing

– Paying Cash

– Obtaining Credit

– Direct Lending

– Dealership Financing

– Car Title Loans

Page 42: Buying, Financing and Maintaining a Car

Financing Tips

• FINANCING TIPS:

– Shop before going to the dealer. Get pre-approved by a bank or credit union.

– Make the largest down payment possible.

– Pay for the tags, title and taxes separately instead of financing them.

– Negotiate the best price on the car before applying for a loan at the dealership.

– Beware of dealers who ask you how much you can afford to pay each month. Do NOT buy a car based on the amount of monthly payments.

– Be aware of penalties for paying off your loan early.

– Be wary of ads that promise loans for people with bad credit. These deals often require a higher down payment or have a very high interest rate.

Page 43: Buying, Financing and Maintaining a Car

Language

• FINANCING LANGUAGE:– Annual Percentage Rate (APR) – Cost of credit as

a percentage.

– Down Payment – Amount paid at purchase to reduce the amount financed.

– Amount Financed – $ amount of credit provided to you.

– Finance Charge – Total $ amount you pay to use credit.

– Fixed Rate Financing – Finance rate remains the same over the life of the contract.

– Variable Rate Financing – Finance rate changes over the life of the contract.

– Assignee – A bank, finance company, or credit union that purchases the contract from the dealer.

Page 44: Buying, Financing and Maintaining a Car

Step-by-Step Guide

• BEFORE VISITING THE DEALERSHIP:

– Evaluate your financial situation to determine how much you can afford to pay each month.

– Determine the price range of the car you are thinking of buying.

– Understand the value and cost of optional credit insurance if you agree to purchase.

– Compare annual percentage rates and financing terms from multiple finance sources. Your credit history may affect the finance rate you are able to negotiate.

Page 45: Buying, Financing and Maintaining a Car

Step-by-Step Guide

• WHEN VISITING THE DEALERSHIP:

– Stick to what you can afford in terms of car price and optional products.

– Negotiate your finance arrangements and terms.

– Read the contract carefully before you sign.

– NOTE: There is NO 3-day right to rescind a car purchase in Delaware!

Page 46: Buying, Financing and Maintaining a Car

Step-by-Step Guide

• WHAT HAPPENS WHEN YOU APPLY FOR FINANCING:

– Fill out a credit application.

– The dealership will obtain a copy of your credit report and sell your contract to a bank, finance company or credit union.

– The dealer may still be able to offer manufacturer incentives, such as reduced finance rates or cash back on certain models.

– If no special financing offers are available, negotiate the APR and terms of payment with the dealership.

Page 47: Buying, Financing and Maintaining a Car

Step-by-Step Guide

• AFTER COMPLETING THE CAR PURCHASE OR LEASE:

– Be aware that if you financed the car, the lender holds a lien on the car’s title until you have paid the contract in full.

– Make your payments on time. Late or missed payments incur late fees, appear on your credit report, and impact your ability to get credit in the future.

Page 48: Buying, Financing and Maintaining a Car

Paying Cash

• PAYING CASH:

– If money is tight, pay cash for a less expensive car to avoid these problems:

• Sale before loan expiration: The amount received from the sale may be less than the amount needed to pay off the loan.

• Car repossessed / totaled: You may need to repay the remainder of the loan after the proceeds from the sale of the car or insurance payment have been deducted.

Page 49: Buying, Financing and Maintaining a Car

Obtaining Credit

• WHAT IT DOES:• Increases total cost of car because

of interest and other loan costs.

• Consider amount of down payment, loan term, and Annual Percentage Rate (APR).

• Rates are usually higher and loan terms shorter for used cars than for new cars.

– New car loans last 3 to 7 years.– Used car loans last 2 to 5 years.

• Be cautious about ads offering financing to first-time buyers or people with bad credit.

Page 50: Buying, Financing and Maintaining a Car

Obtaining Credit

• FACTORS THAT INFLUENCE YOUR APR:

– Credit history

– Current finance rates

– Competition

– Market conditions

– Special offers

Page 51: Buying, Financing and Maintaining a Car

Obtaining Credit

• BEFORE FINANCING, KNOW THE FOLLOWING:

• Exact price you will pay for the vehicle;

• Amount you are financing;

• Finance charge;

• Annual percentage rate (APR);

• Number and amount of payments; and

• Total sales price (sum of monthly payments + down payment).

Page 52: Buying, Financing and Maintaining a Car

Direct Lending

• DIRECT LENDING

– Buyer obtains a loan through a finance company, bank, or credit union.

– Buyer uses loan proceeds from direct lender to pay dealership for car.

– Buyer agrees to pay amount financed + agreed-upon finance charge over a period of time.

Page 53: Buying, Financing and Maintaining a Car

Dealer Financing

• DEALER FINANCING– Buyer obtains a loan

through dealership.

– Buyer agrees to pay amount financed + agreed-upon finance charge over a period of time.

– Dealership typically sells contract to assignee, such as bank or credit union, which services the account and collects the payments.

Page 54: Buying, Financing and Maintaining a Car

Dealer Financing

• PROS & CONS:– PROS:

• Convenience.

• Multiple financing relationships dealer can offer buyers a range of financing options.

• Special programs dealerships may offer manufacturer-sponsored, low-rate programs.

– CONS:

• Dealers might try to make extra profit through the loan process.

• The dealer may pick the lender that makes the most profit for the dealership instead of the one with the best rate for you.

• The lender might pay the dealership for referring customers to it.

Page 55: Buying, Financing and Maintaining a Car

Dealer Financing

• WHEN DEALERS OFFER LOW INTEREST RATES:

– Dealers sometimes offer low loan rates for specific cars. To get the lowest advertised rates, you might have to:

• Make a large down payment;

• Agree to a short loan term (usually 3 years or less);

• Have an excellent credit history; and

• Pay a participation fee.

– Example: Although a 2% APR might be advertised, the company might charge you a participation fee of $200 up front to get the low rate.

Page 56: Buying, Financing and Maintaining a Car

Dealer Financing

• FEDERAL LAWS THAT REGULATE DEALER FINANCING AND LEASING:

– Truth in Lending Act

– Consumer Leasing Act

– Credit Practices Rule

– Equal Credit Opportunity Act

– Fair Credit Reporting Act

Page 57: Buying, Financing and Maintaining a Car

Car Title Loans

• BEWARE OF CAR TITLE LOANS:

– Title loans are short-term (usually 1 month) loans that allow you to use your car as collateral to borrow money.

– These loans can be very costly:

• Instead of an APR, the lender charges a high rate of interest on a monthly basis.

• You keep your car, but you must give title to your car to the lender.

• If you fail to repay the loan, the lender can repossess the car.

• The lender may renegotiate and allow you to pay only the interest on the loan. More interest will accrue during the next month.

Page 58: Buying, Financing and Maintaining a Car

Repossession

Page 59: Buying, Financing and Maintaining a Car

Repossession

• SEIZING THE CAR:

– A creditor can seize your car as soon as you default on your loan or lease.

– The creditor can come onto your property to do so, but the creditor may not commit a breach of the peace.

• i.e. using physical force, threats of force, or removing your car from a closed garage without your permission.

– If the creditor agrees to change your payment date, the terms of your original contract may no longer apply. Get such a change in writing.

Page 60: Buying, Financing and Maintaining a Car

Repossession

• SELLING THE VEHICLE:

– Once the car has been repossessed, the creditor may either keep it as compensation for your debt or resell it at a public or private sale.

– You may be entitled to “redeem” or buy back your car by paying the full amount you owe, plus expenses connected with the repossession.

– You may try to buy back the car by bidding on it at the repossession sale.

– The resale of a repossessed car must be conducted in a “commercially reasonable manner” for an amount not below market value.

Page 61: Buying, Financing and Maintaining a Car

Repossession

• PAYING THE DEFICIENCY:

– Any difference between what you owe on your contract and what your creditor gets for reselling the car is a “deficiency.”

– Your creditor may sue you for a deficiency judgment to collect the remaining amount owed.

– Your creditor must pay you if there are surplus funds after the sale proceeds are applied to the outstanding contract obligation.

Page 62: Buying, Financing and Maintaining a Car

Fuel

Page 63: Buying, Financing and Maintaining a Car

Fuel

• Alternative Fueled Vehicles (AFVs)

• Alternative Fuels

• Hybrids

• Octane Levels

• “Gas Saving” Products

• Ways to Increase Fuel Efficiency

Page 64: Buying, Financing and Maintaining a Car

Fuel

• ALTERNATIVE FUELED VEHICLES (AFVs)

– Operate on methanol, ethanol, compressed natural gas, liquefied petroleum gas, or electricity.

– Some can run on conventional fuels as well as alternative fuels.

– AFVs are required to have labels that include:

• Vehicle’s estimated cruising range;• Fuel type and availability;• Operating costs;• Performance / convenience;• Energy security / renewability; and• Emissions.

– Some AFVs do not travel as far as gasoline-powered vehicles.

Page 65: Buying, Financing and Maintaining a Car

Fuel

• ALTERNATIVE FUELS:

– PROS:

• Substantial tax breaks may be available for the purchase of environmentally-friendly cars.

– CONS:

• Some alternative fuels do not allow consumers to travel as many miles on a gallon-for-gallon basis.

• AFVs may cost more than a comparable gasoline-powered vehicle.

Page 66: Buying, Financing and Maintaining a Car

Fuel

• HYBRIDS

– Combine the benefits of gasoline engines and electric motors.

– Can be configured to achieve a variety of objectives, including:

• Improved fuel economy; and

• Increased power.

– Unlike AFVs, hybrids are NOT required to have labels regarding vehicle statistics.

Page 67: Buying, Financing and Maintaining a Car

Fuel

• OCTANE LEVELS:

– Use the octane level specified in the car’s owner’s manual.

• For most cars, this will be regular octane.

• Only switch to higher octane if your engine knocks or pings.

– High octane gas does not keep your engine cleaner than regular octane gas.

Page 68: Buying, Financing and Maintaining a Car

Fuel

• “GAS SAVING” PRODUCTS:

– No government agency endorses gas-saving products for cars.

– No product has been found to significantly improve gas mileage.

– Some gas-saving products may damage a car’s engine or cause substantial increases in exhaust emissions.

– Consumers do not have the ability to test precise changes in gas mileage after installing a product.

Page 69: Buying, Financing and Maintaining a Car

Fuel

• “GAS SAVING” PRODUCTS: DEVICES TESTED BY EPA

– Air bleed devices– Vapor bleed devices– Liquid injection– Ignition devices– Fuel line devices– Mixture enhancers– Internal engine modifications– Accessory drive modifiers– Fuel additives– Oil additives– Driving habit modifiers

Page 70: Buying, Financing and Maintaining a Car

Fuel

• WAYS TO IMPROVE FUEL EFFICIENCY: – Stay within posted speed limits.

– Use cruise control when appropriate.

– Anticipate driving situations to avoid unnecessary braking and acceleration.

– Avoid unnecessary idling by turning off engine unless in traffic.

– Remove excess weight from the trunk.

Page 71: Buying, Financing and Maintaining a Car

Fuel

• WAYS TO IMPROVE FUEL EFFICIENCY: – Keep your engine tuned.

– Keep your tires properly inflated and aligned.

– Change your oil.

– Consider buying a fuel efficient vehicle.

– Combine errands.

– Stagger your work hours to avoid peak rush hour.

– Carpool or use public transit.

Page 72: Buying, Financing and Maintaining a Car

Auto Repair

Page 73: Buying, Financing and Maintaining a Car

Auto Repair

• HOW TO CHOOSE A REPAIR SHOP:

– Ask for recommendations from people you trust.

– Look for an auto repair shop before you need one to avoid being rushed.

– Shop around by telephone for the best deal, and compare warranty policies on repairs.

– Check with the state Attorney General or local consumer protection agency to see if there is a record of complaints.

– Make sure the shop will honor your car’s warranty.

Page 74: Buying, Financing and Maintaining a Car

Auto Repair

• UNDERSTANDING REPAIR CHARGES:

– Ask if shop charges based on a flat rate or actual time spent.

– If repairs will be complicated or expensive, consider getting a second opinion.

– Find out if there will be a diagnostic charge if you decide to have the work performed elsewhere.

– Shops that only do diagnostic work may be able to give you an objective opinion about which repairs are necessary.

– Ask for a written estimate.

Page 75: Buying, Financing and Maintaining a Car

Auto Repair

• WRITTEN ESTIMATES:

– A written estimate should be signed and should identify:

• The condition to be repaired;

• The parts needed; and

• The anticipated labor charge

– A written estimate should state that the shop will contact you for approval before they do any work exceeding a specified amount of time or money.

Page 76: Buying, Financing and Maintaining a Car

Auto Repair

• PART REPAIR / REPLACEMENT:

– New parts Made to original manufacturer’s specifications, either by the vehicle manufacturer or an independent company.

– Remanufactured, rebuilt, and reconditioned parts Parts that have been restored to a sound working condition. Parts may have a warranty.

– Salvage parts Used parts taken from another vehicle without alteration. Reliability is seldom guaranteed.

Page 77: Buying, Financing and Maintaining a Car

Auto Repair

• COMPLETED REPAIR ORDER:

– After the work is done, get a completed repair order listing:

• Each repair;

• Parts supplied;

• Cost of each part;

• Labor charges; and

• Car’s odometer reading when you brought the car in as well as when the repair order was completed.

– Ask for all replaced parts.

Page 78: Buying, Financing and Maintaining a Car

Auto Repair

• PREVENTIVE MAINTENANCE:– Consequences of postponing maintenance:

• Failure of specific parts or an entire system;

• Poor fuel economy;

• Unreliability;

• Costly breakdowns; and

• Invalidation of warranty.

– Maintenance guidelines:

• Follow manufacturer’s maintenance schedule in your owner’s manual.

• Compare shop maintenance schedules with those recommended in the owner’s manual.