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Transportation Going Mobile ISBE Objectives After studying this unit students will be able to: Identify alternative means of transportation; Determine the relative advantages of each;

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Going Mobile

isbe objectives
ISBE Objectives
  • After studying this unit students will be able to:
  • Identify alternative means of transportation;
  • Determine the relative advantages of each;
  • Determine the need for transportation based on usage patterns, operating costs, maintenance costs and storage fees;
Recognize the importance of counting a person’s time, safety and comfort as costs of alternative transportation modes;
  • Recognize that a large portion of income is used for the purchase and use of an automobile;
  • Recognize the care needed in the efficient and economic operation of an automobile;
Understand how to evaluate different modes of transportation with regards to financing, insurance, safety, convenience, maintenance, and energy use;
  • Be aware of the various social costs of transportation, i.e., pollution, depletion of resources and congestion;
  • Understand that as much care should be taken in shopping for automobile financing as is taken in shopping for the car itself.
transportation systems
Transportation Systems
  • Provide freedom in regard to living, working and shopping,
  • Increase economic activity and
  • Provide for efficient distribution of goods and services.
system interdependence
System Interdependence
  • Competition between
  • The network of highways, streets and alleys
    • Railroads
    • Subways and
    • Airlines
  • Policies that favor one might hurt others, e.g., free streets,

subsidies to others.

transportation needs
Transportation Needs
  • Travel to
    • School
    • Shopping
    • Work
    • Recreation
  • Related to financial resources
  • Physical limitations
  • Time availability
  • Travel type vs. availability
travel advantages disadvantages
Travel Advantages/Disadvantages
  • Rail advantages
    • Leave the driving to us
    • Beautiful scenery without billboards
    • Few stops on long distance trips
    • Sleeping quarters
  • Rail disadvantages
    • High cost
    • Schedule
    • Can’t stop for closer inspection
Bus advantages
    • Leave the driving to us
    • Low price
  • Bus disadvantages
    • Schedule
    • Traffic concerns
    • Seedy riders
    • Frequent stops
Air advantages
    • Speed
    • Safety
  • Air disadvantage
    • Schedule
    • Airport locations
    • Cabin air
Mass transit advantages
    • Price
    • Leave the driving to us
  • Mass transit disadvantages
    • Schedules
    • Travel companions
    • Distance to access
    • Frequent stops
    • Traffic?
    • Exercise
    • Door to door transportation
    • No parking
    • No schedule
  • Walking Disadvantages
    • Travel time
    • Weather?
Bicycling Advantages
    • Exercise
    • Door to door transportation
    • Low/no cost parking
    • No schedule
  • Bicycling Disadvantages
    • Travel time
    • Weather?
Car Advantages
    • Relatively efficient schedule
    • Relatively convenient parking?
  • Car Disadvantages
      • Traffic
      • Cost?
      • Safety?
transportation costs
Transportation Costs
  • Explicit costs
  • Fixed costs
    • Depreciation
    • Lost interest on capital invested
  • Variable costs
    • Gas
    • Maintenance
    • Repairs
Implicit costs
    • Social costs
    • Subsidies
non economic selection factors
Non-economic Selection Factors
  • Scheduling freedom
  • Flexibility
  • Availability
  • Convenience
  • Service
  • Value of time
  • Reliability
  • Comfort
  • Style
  • Status
  • Safety
  • Privacy
auto aquisition
Auto Aquisition
  • There are hundreds of new
  • Cars
  • Trucks
  • Vans and
  • SUVs
  • every year
That new ‘vette you’d love to have probably
  • costs more than you can afford
  • only carries two passengers
  • only carries minimal luggage
  • guzzles gas
  • is expensive to maintain and
  • is out f the world to insure
when ride shopping
When “ride” shopping
  • Consider
  • Typical number of passengers
  • Other items to be transported
  • Where you will drive
  • Climate where you will drive
  • How much will you drive
  • Ease of maintenance
  • AM/FM radio or satellite
  • Side air bags
  • On Star
  • Smooth ride/steering
  • Multi-changer CD player
  • DVD player
can you afford it
Can you afford it?
  • Buy or lease
  • Cash or finance
  • Insurance
  • Maintenance and repair
where to look for new cars
Where to look for new cars
  • New car dealerships
  • Buying services
  • The Internet
new car dealers can
New car dealers can
  • Special order American cars
  • Search other dealer’s inventory
  • Negotiate prices
  • Usually offer one of the Big Three and

one or more import

tell buying services
Tell Buying Services
  • The make
  • Model and
  • Options you want and they will
  • Buy @ a rock bottom price
  • Deliver it to a dealer near you
buying services also provide
Buying Services also provide
  • Financing
  • Leasing
  • Extended service contracts and
  • Dozens of Internet sites provide services to buying services, but

you make the deal

evaluating a new car
Evaluating a New Car
  • Does it have the options you want?
  • Special order
  • Buy off lot – better deal
  • or let dealer locate
  • Ensure satisfactory handling,
  • driving,
  • parking (size)
the sticker
The Sticker
  • Each new car sticker must include fuel economy guides for highway and

city driving, plus an estimate for

annual fuel cost based on a specified number of miles

Don’t pay for what you don’t want
  • Roof rack
  • Cow catcher
  • Spinners
  • AWD
consider operating costs
Consider Operating Costs
  • Gas
  • Tires
  • Insurance
  • Maintenance
  • Repairs
  • Check out car magazines
  • Car and Driver
  • Road and Track, etc.
where to look for used cars
Where to look for used cars
  • New car dealerships
  • Used car dealerships
  • Newspaper want adds
  • Friends and family
  • Auctions
  • Fleet discounts
  • Internet
Buying a Used Vehicle: Questions to ask
  • Where did it come from
  • New car dealerships - trade-ins
  • Used car dealerships – trade ins
  • Bought from individuals
  • Rental companies
Company fleets
  • Taxicab companies
  • Rebuilt wrecks
  • Learn the car’s history via
  • by inserting VIN number from front left dashboard.
how is the economy doing
How is the Economy Doing?
  • Use any source you want to, newspaper, TV, radio, parents, the internet, etc., in coming up with an answer tomorrow.
  • Multiple Choice – We are in…
    • Recovery
    • Prosperity
    • Recession
    • depression
evaluating used vehicles
Evaluating Used Vehicles
  • Late models may have manufacturer’s/dealer’s warantee.
  • Usually sold “As is” (WYSIWYG).
  • You’re responsible for all repairs.
  • Evaluate in daylight so bright light won’t hide defects.
  • Get a mechanic’s check and tell the owner you’re going to do it.
Check for rust.
  • Check for body repairs.
  • Look around the trunk lid and doors to see if the car has been painted.
  • Check out the tires to see if they’ll need to be replaced soon (Lincoln).
  • Check the shocks by pushing down on each fender – cars should settle down quickly an not keep bouncing.
Open and close all windows, doors and trunk.
  • Look at the condition of the interior to see how well the car has been maintained.
  • Make sure it has a good spare and jack.
  • Drive it on different kinds of roads and

speeds to see how it rides, handles

and sounds with the sound system off.

Test brakes to ensure they are quiet
  • and stop the car smoothly.
  • Test all gears, including reverse.
  • Check all electrical devices:
  • Turn signals
  • Headlights, including brights
  • Radio
  • Air Heat
  • Power windows and seats
  • Windshield wipers and washer
  • Get an odometer statement and talk to the previous owner
  • Inspect the title
  • If it has a salvage title, don’t buy it
  • (totaled by insurance companies and repaired by someone…anyone)
  • Begins with the Manufacturer’s Suggested Retail Price (MSRP).
  • Determine the true dealer cost
  • Copy all info from the window sticker
  • Use a buyer’s guide to find the actual dealer’s cost of base vehicle

and each option.

  • Total the dealer costs to determine dealer’s invoice price.
Find the dealer’s holdback in the buyer’s guide.
  • Subtract the holdback from the dealer invoice price along with rebates and dealer incentives.
  • Add the destination charges to get the true dealer cost.
Add 5% to the dealer invoice for fair profit and expect non-negotiable

advertising fees of 1-3% of the sticker price to be added to the total.

  • If you have a trade-in, use a buyer’s

guide to find its wholesale value and try not to accept that it is less

than 5% below that wholesale value.

  • Clean it thoroughly.
Make sure it is in good working condition
  • Put all paperwork in the glove box
    • Title
    • Registration
Subtract the trade-in value of your vehicle from the price you’ve determined in steps 1 and 2 then add:
  • Dealer prep charges
  • Documentation fees
  • Sales tax
  • License and title fees to reach total cost
avoid dealer extras
Avoid Dealer Extras
  • Rustproofing
  • Undercoating
  • Protection packages
  • Dealer added options
  • Extended warranties or service contracts
  • Dealers charge substantial markups for these unnecessary items
buying a used car
Buying a Used Car
  • Use a buyer’s guide like:
  • Edmunds
  • Pace
  • NADA Blue Books
  • To determine the value of a vehicle they’ll give an average trade in and

retail value as well as

mileage adjustments

Inspect vehicles as indicated before
  • After inspection, decrease the book value of the vehicle based on its condition.
  • If you have a trade-in, use a buyer’s guide to find the wholesale value

of your trade-in and try not to accept the value that is less than 5% below the wholesale value

Clean it thoroughly
  • Make sure it’s in good operating condition
  • Put all paperwork in the glove box
    • Title
    • Registration
  • Subtract the trade-in value of your vehicle from the price you determined in steps 1-3.
paying cash
Paying Cash
  • Your cost will include the
  • Negotiated price
  • Minus the trade-in value
  • Minus the down-payment
  • Plus sales tax on one or more of the following:
Documentation fee
  • Destination charge
  • Preparation charge
  • License and title
  • Credit Insurance (ok if you choose it)
  • Dealer charges (avoid)
In reality, most people can’t afford to pay cash so it becomes a matter of how much you can afford to pay each


where to finance
Where to Finance
  • The dealer
  • Commercial Banks
  • Savings and Loans
  • Credit Unions
  • Finance Corporations
The dealers can usually offer you financing through the manufacturer’s credit subsidiary.
  • One advantage of dealer financing is often very low interest rates i.e.,
  • 0-1.9% financing (dealer) vs
  • 8-9% through financial institutions
  • Example of $10,522.69 borrowed at 1.9% / 3 years = $301.79 / mo.

x 36

$10,864.44 amt. paid

-$10,522.69 amt. financed

$311.75 interest paid

Example of $10,522.69 borrowed at 9% / 3 years = $301.79 / mo.

x 36

$12,048.72 amt. paid

-$10,522.69 amt. financed

$1,526.03 interest paid

311.75 @ 1.9%

$1,214.28 = difference

Where is the easiest place to get a loan from?
  • The financial institution where you do the rest of your banking. If your

income isn’t sufficient, they may still grant you a loan if you obtain a

co-signer who guarantees repayment if

you default.

The interest rate you’ll be charged will be based on the current

market rate of interest which is influenced by the government organization called the

Federal Reserve or the Fed.

Finance companies are the lenders of

last resort for those who can’t borrow anywhere else. They make loans for

used vehicles and their interest rates will be 2-3 times

higher than other financial institutions.

To borrow money, you’ll be asked to

sign a contract which will show

what obligations you and the lender have including the Truth-In-Lending Disclosure Statement which we discussed in the chapter on credit.

If you’re financing with a dealer, the contract will also include an Itemization of Amount Financed which details the terms of the sale:
  • Cash Price
  • Trade-in-value
  • Cash Down Payment
  • Rebates
Sales Tax
  • License and Title Fee
  • Credit Insurance Premiums
  • Documentation and other fees
  • Amount Financed
  • Calculate Finance Charges by looking at and comparing APRs.
  • Advantages
  • You can spend more time driving a

new car

  • You have lower monthly payments

on depreciation

  • Substantial down payment
  • You own nothing
  • You’ll always have a car payment
Use limitations
  • 12,000-15,000 miles per year
  • Modifications result in big fines
  • Excessive wear and tear charges
  • Early termination fees
closed end lease
Closed-end Lease
  • Only kind of lease you want
  • Value of the vehicle at the end of lease is established in advance
  • Any fees are spelled out in advance
  • At the end of the lease you
  • Pay any predetermined lease end fee or charges and walk away from it or
  • Buy the car for its predetermined value
  • Sell the vehicle yourself and keep the profit
  • Same as above, but make a good deal on another vehicle
  • Be sure to check before you buy.
  • Why?
  • Premiums can be as low as a few

hundred dollars/year or as high as

several thousand/year.

the purpose of insurance
The Purpose of Insurance
  • Protect you from unforeseen financial loss related to your vehicle including:
  • Medical expenses for anyone involved;
  • Damage to your vehicle due to
    • Accident
    • Vandalism
    • Act of God
insurance also covers
Insurance also covers
  • Vehicle theft
  • Compensation to others for
    • Medical expenses
    • Loss of income
    • Pain and suffering
    • Permanent injury
  • When you are at fault
  • Compensation to other people for damage to their

property when you’re at

fault in an accident.

You buy a policy which is a contract between you and the company which specifies:
  • The coverages you’re purchasing
  • Conditions under which you’re covered
  • The premium you’re paying
insurance coverages
Insurance Coverages
  • Bodily Liability Injury – covers injury
  • to others when you are at fault and
  • provides legal defense and
  • payment of damages up to the
  • limit of liability purchased including
  • Medical expenses
  • Loss of income
  • Pain and suffering and
  • Permanent injury
insurance required
Insurance Required
  • Most states require a minimum amount of

liability insurance before you can

register your car to protect others against your


Young and unsafe drivers will be placed in an assigned risk insurance

pool and be assigned an insurance company with a premium that will be very


Collision covers damages to the

policyholder’s car as the result of a

collision with another car or object or if

the car turns over. Payment is made no

matter who is at fault. Coverage includes

a deductible which requires the policy holder to assume a portion of the cost of the damage. Common deductibles are

  • $100, $250, and $500.
An insurance company has the option of either paying the cost of the repairs less the deductible or the actual cash value of the vehicle, so…
  • It may not be economical to buy collision insurance coverage if the value of the car is


Coverage is available which will

replace the vehicle rather than paying the actual cash value for a substantially higher premium.

medical payments
Medical Payments
  • Covers the reasonable medical expenses of the policyholder and their family if:
  • They’re injured while riding in

their vehicle

  • They’re injured while riding in someone else’s vehicle
  • If they’re struck by a vehicle while walking or bicycling
  • No matter who’s at fault.
personal injury protection
Personal Injury Protection
  • Is mandatory in states with no-fault insurance and provides a broader form of medical coverage, including funeral costs, loss of income, and

cost of in-home assistance regardless of who’s at fault.

Uninsured and underinsured motorist (bodily injury) insurance covers

reasonable medical expenses of policyholder and

family if injured by a hit and run driver, uninsured driver by underinsured driver while in their car, bicycling or


Glass breakage – covers deductible when cracked glass is replaced.
  • Rental reimbursement – while car is

being fixed after an accident.

  • Towing insurance – after a breakdown or accident
Uninsured/underinsured motorist property damage insurance to property

caused by an uninsured/underinsured motorist.

factors influencing premiums
Factors Influencing Premiums
  • Age
  • Driving records
  • Type of vehicle
  • Where you drive
  • When you drive
  • Coverages you buy
  • Deductibles you want
premium discounts
Premium Discounts
  • Auto/Homeowner’s discount if

both policies are carried with the

same company.

  • Multi-car discount
  • Good driver discount
  • Passive restraint discount – air bags
  • Driver Education discount
  • Car pool discount
  • Good student discount
operating expenses
Operating Expenses
  • Argentina


  • Canada


  • England


  • Germany


  • Japan


  • Norway


  • When gasoline cost $1.28 in the USA, how much do you think it cost in:
  • A good all-season tire for a subcompact might cost $60-70 while a high performance tire for a sports car

may cost you $175 or more.

  • How far and how you drive will impact how frequently you have to buy tires.
maintain your tires
Maintain Your Tires
  • Check tire pressure monthly
  • Check tire treads for uneven wear and

tread depth

  • Rotate tires every 6,000 miles
  • Drive smoothly
  • Avoid hazards like potholes.
Follow periodic maintenance schedule.
  • How do you know what it is?
  • Avoid extended warranties as they are not recommended by

consumer experts.

  • Change the oil every 3,000 miles.
monthly checks
Monthly Checks
  • Oil level – when you gas up
  • Radiator coolant – when you gas up
  • Transmission fluid
  • Power steering fluid
  • Brake fluid
  • Air filter
  • Keep it washed, waxed and vacuumed.
  • Buy a car that can be maintained and

repaired not only locally, but everywhere you anticipate


  • Find a mechanic who’s reliable, does

good work at a reasonable price,

through word of mouth. The shop should be clean, well kept and have

modern equipment.

  • Look for credentials such as American Automotive Association

(AAA) National Institute of Automotive Service Excellence


repair steps
Repair Steps
  • Document the exact symptoms of the problem when it happens.
  • Make sure mechanic calls and explains the problem and cost

before starting repairs.

  • Ask to see the old part.
  • Be prepared to get a second opinion if you don’t like the explanation.
  • Beware of scams.
just in case
Just in Case
  • Carry a cell phone or OnStar
  • Learn how to change your tires
  • Make sure you spare is good when

your tires are rotated.

  • Carry jumper cables

triangle reflectors or flares

a plastic bottle in case you overheat

an empty container for gas

tool kit
Tool Kit
  • Don’t leave home without it
  • Hammer
  • Pliers
  • Flat and Philips head screw driver
  • Crescent wrench
  • Wire coat hanger
  • Duct tape
  • Flash light
11 30 05 headlines
11-30-05 Headlines
  • Consumer Confidence Up As Gas Prices Fall(BREITBART.COM - Consumer Confidence Up As Gas Prices Fall)
  • Sales of New Homes Setting Record
  • (
  • Sales Climb at Retailers on Internet(
more recent news
More Recent News
  • Business inventories fell at a $13.4 billion annual rate.
  • What does this mean?
  • the durable goods report showed an increase in sales of business equipment
  • Non-farm payrolls grew by 215,000 last month
more economic news
More Economic News
  • low inflation (2.5%),
  • strong productivity (due to educated employees),
  • lower gasoline prices ($2.11),
  • a record setting housing market,
  • increases in consumer confidence (Consumer spending, which accounts for about 70 percent of the economy, expanded at a 4.2 percent annual pace.
  • The gain in consumer spending was paced by auto sales in July, which rose at the second-fastest pace on record)
  • and business capital investment (highest since the boom in 1985)
What’s a key indicator of which phase of the business cycle we are in?
  • Unemployment
  • the unemployment rate is 5% that's lower than the average for the
  • 1970s,
  • 1980s and
  • 1990s.
  • 5% unemployment has traditionally been considered full employment.
What is the Fed going to do

with interest rates the next time it meets?

    • Keep interest rates the same?
    • Lower interest rates?
    • Raise interest rates?
Reports yesterday showing higher

consumer confidence,

new home sales and

durable goods orders

supported forecasts that central bankers will keep

raising interest rates to ensure

inflation doesn't accelerate.

During 2004 when attacks on the economy were in full force,

36% of Americans thought we were in recession. Now, one year later, even though unemployment has fallen from 5-1/2 to 5% and real GDP has expanded by 3.7% the number who think a recession is

underway has climbed to 43%.

  • Why do you think that is?
"No matter what maps, no matter what data are presented, no matter which way markets move, a pall of pessimism hangs over the economy. It's amazing. When bond yields rise, it's considered bad to the

housing market and the computer industry, but if bond yields fall and the yield curve narrows toward inversion, that's bad, too, because an inverted yield curve could signal a recession. If housing data weaken as they did on Monday when existing home sales fell, well, that's a sign of a

bursting housing bubble.

"If housing data strengthen as they did on Tuesday when new homes rose, well, that's negative because

the fed may raise rates further. If foreigners buy our bonds, we're not

saving enough ourselves. If foreigners don't buy our bonds

interest rates could rise. If wages

go up, inflation is coming. If wages

go down, the economy is in trouble.

The economic boom is going to require an increase in the use of petroleum products which could drive the cost of heating oil in the northeast up.
  • This onslaught of negative thinking is clearly having an impact.
Count every "F" in the following text: