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Buying a Car - PowerPoint PPT Presentation

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Buying a Car. Questions to ask yourself?. Is it a good time in your life? Do you need a car? Can you make the payments? Can you afford all costs? Gas, insurance, repairs,. How much can you afford?. You shouldn’t spend more than about 13% of your income

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Buying a Car

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Presentation Transcript
questions to ask yourself
Questions to ask yourself?
  • Is it a good time in your life?
  • Do you need a car?
  • Can you make the payments?
  • Can you afford all costs?
    • Gas, insurance, repairs,
how much can you afford
How much can you afford?
  • You shouldn’t spend more than about 13% of your income
    • Example: Income $40,000 = ____________
    • $5,200/12 months= ____________
    • $433 per month which should include ALL expenses car payment, car insurance, gas etc.
to buy new or used
To Buy New or Used
  • Which do you think is best?
  • What are some advantages of a new car?
  • What are some disadvantages?
  • What are some advantages of a used car?
  • What are some disadvantages of a used car?
buying a new car

Nice new interior, shiny car and quiet ride.

Reliable: have fewer problems and no repairs

Repairs usually covered by warranty.

Good warranty anywhere from 5 years or 70,000 miles (different with every dealership)


More costly

Depreciates once driven off lot.

Buying a New Car
buying a used car

If you are lucky cheaper monthly payments

Sometimes a nice interior and in good condition


Costly repairs

Mileage on the car

Age of the vehicle

You don’t know all of the problems with the car.

Buying a Used Car
things to look for when inspecting a used car
Things to look for when inspecting a used car.
  • Mismatched paint: indicates an accident
  • Look for any rust
  • Look for stains on interior
  • Check all lights
  • Drive slowly and let go of the wheel? Why
    • Car should not pull to left or right if it does something is WRONG!
  • Step on brake firmly
7. Make sure gears shift w/o grinding or slipping out.

8. Look for any smoke too much is not a good sign.

9. Take it to a mechanic for a final check before you buy it.

10. Check car fax any history will show up with bin number.

choosing a car
Choosing a Car
  • Compact
  • Sports cars
  • SUV
  • Pick up trucks
  • Luxury
choosing a car1
Choosing a car
  • Options and Features:
      • Leather seats
      • Cup holders
      • Air conditioning
      • Sunroof
      • convertible top
      • Cruise control
      • Power locks
      • Engine size.
to buy or to lease
To Buy or to Lease
  • What is the difference?
    • What do you think is the difference between the two?
to buy
To Buy
  • When you buy you will own the car once you pay off the loan.
to lease
To Lease
  • To lease a car similar to renting.
  • When you lease you are renting the car from the dealership but you are still making monthly payments.
  • At the end you do not own the car it goes back to the dealership.
  • Lease for certain years, with terms and limitations: you can only drive a certain amount of miles.
who should lease
Who should lease?
  • Someone who:
    • Can’t pay for a new car
    • Replaces cars regularly
    • Drives 12,000 miles per year
who should not lease
Who should NOT lease?
  • Someone who:
    • Can pay cash for a new car
    • Drives many or very few miles
    • Keeps a car for many years
    • Is hard on a car: drives a lot, doesn’t take very good care of car.
car buying process
Car Buying Process
  • Figure out how much you can afford
  • Pick a car make and model that you like
  • Figure out how much you can put as a down payment
  • Dealership
    • Read the sticker price
    • Test drive
    • Negotiate a price on the vehicle
5. Take your down payment and subtract from unpaid cash balance
  • Example: $1,000 down payment on $16,065 the amount to be financed is _____________?
  • $15,065. Finance = the amount of interest you will pay over the term of your car loan.
  • Car loan 8% interest for 48 months. How much is the interest?
  • Total finance charge is: $2,588.74
how do they figure out the finance charge
How do they figure out the finance charge?
  • They take your offer and take it to a finance manager.
  • They will take all of you information to run a credit check.
  • They qualify how much you are putting down, if you are trading a car and then they “grade” you.
    • Grading means the “risk” then they offer you a interest rate.
    • How many months you are financing.
putting it all together
Putting it all together
    • The better your credit
    • The more money you put as a down payment
    • The shorter length of the loan

= the risk and will = your APR.

  • Example: if you are not putting a lot of money down and your credit score is low your APR may be higher 20%
  • If you give a larger down payment and your credit score is high your APR could be 4%.
so what is important
So what is important?
  • What do you think is important to do?
last step
Last Step
  • 6. Signing your note (contract):
    • When you sign you are agreeing to make monthly payments to bank/credit union/finance company WHOEVER YOU BORROWED FROM.
    • Once everything goes through you can take you car home. (After the 2-4 hour process)
    • You must agree to payment schedule and get all of the information that you need.
what happens if you don t pay
What happens if you don’t pay?
  • If you do not pay your car can get repossessed.
    • Why?
    • Because you do not own the car the bank/credit union owns the car UNTIL you pay off the car loan.
    • Then YOU get the title.
    • Title is the deed to the car which says you are the owner.