How can I get the best
deal when purchasing
an automobile?
Auto Unit Research
Task: Research the assigned item and summarize the info you find by making a bullet list.
This document will function as a source of information for everyone in the class
so be detailed and thorough. Add a graphic to enhance your slide.
2. Selecting a Car - Research Reliable Sources (give 5 options)
Used cars
Tend to have low mileage and few problems, little to no previous damage
Dealerships
PellyBlueBook
Carfax
ConsumerReports
Edmunds
NADA Values
New cars
Private sellers
FaceBook Marketplace
National Highway Transportation Safety Association (NHTSA)
Insurance company
3. Calculate How Much You Can Afford
Rule of thumb:
Less than 10% of monthly take-home pay on car payments
Less than 10-30% overall should be spent on your car (gas, maintenance, payments)
Find a car you can afford, pay off loans within 7 years
Finance Options:
Low down-payment
Low interest rates (hard to do with bad credit)
Compare all options (dealer, banks/credit unions)
4. Terms
Student 1
Depreciation
How much value your car loses every second
Depreciates the moment you drive the car off the lot
After about five years, your car will be worth about half as much as it is worth now
VIN (Vehicle Identification Number)
Allows insurances to recall components with your car
Student 2
Invoice (Dealer Cost): The price that the dealer pays the manufacturer for a vehicle, in addition to any options that come with the vehicle
MSRP (state acronym and definition): Manufacturer's Suggested Retail Price (MSRP)
The price that a product's manufacturer recommends it be sold for at point of sale. The MSRP is also referred to as the list price by some retailers.
5. More Terms
Student 1
True Market Value: Pricing system to determine average transaction price for new or used vehicles in your area
Destination Charge: Fee added to price of a new car to cover shipping costs
Student 2
Dealer Holdback: An amount that auto manufacturers provide to auto dealers for each new vehicle that is sold
Examples of Dealer Holdback (by manufacturer)
A percentage of the invoice price or the manufacturer's suggested retail price (~1-3%)
6. Rebates and Incentives
Student 1
Rebate
Definition: A discount provided by the manufacturer to qualifying buyers
Special type of incentive
Examples: Cash back, 0% financing
Student 2
Incentive
Definition: A special offer provided to make you more likely to purchase a vehicle
Examples: Rebate
7. When is the best time to buy a vehicle?
Ideal months: October through December
End of month/end of quarter/end of year (quotas, sales goals, commission)
More deals/sales on holidays or long weekends
8. What do I do with my old car?
Student 1
Sell Yourself
Pros:
Most money possible for a car�Buyer is less experienced than sales person
Cons:
Difficult, time consuming
Cannot buy a new car until old is sold
Tax impact is high
Student 2
Trade-in
Pros:
Easier, less time consuming
Trade-in value = down payment for new car
Less tax impact
Cons:
Negotiate with experienced sales person
Less money available
9. Selling your car
Ways to sell your car:
Craigslist
CarMax�Facebook Marketplace
How do you determine the value of your car?
Private sellers
Armins.com
10. How am I going to pay for my new car?
How much can I afford?
Parents help pay for car
Credit cards
Personal loans
No more than 10-20% of annual income
Should I buy new or used?
12. Advantages of Buying a New Car
It Has Newer Features
New Cars Can Be Customized Exactly to Your Liking
Warranty Coverage and Advanced Safety Features
New Cars are Easier to Buy
Lower Insurance Rates
Less Depreciation
Improved Technology Helps Find a Good Used Car
13. Disadvantages of Buying a New Car
The price of a new car is typically much more expensive than if you bought the vehicle used.
Be prepared to pay much more in sales tax.
New vehicles are said to lose up to 20 percent of their value as soon as you drive off the lot.
14. Tips of Buying a New Car
Rent a vehicle you are thinking about purchasing
Do Your Research
Look Into Prefinancing Options
Shop Around
Negotiate Terms
Transfer plates
Parents can help, they should know do it all
Trade-in your old car
Consider older models
Buy Based on Purchase Price, Not on Monthly Payments.
Should I buy or lease?
16. Advantages of Leasing
Lower repair costs
Save money on sales tax
Lower monthly payments
Less cash required at drive off
Lower repair costs
You don't have to worry about reselling it
You can get a new car every few years hassle-free
More vehicles to choose from
You may have the option to buy the car at the end of the lease
17. Disadvantages of Leasing
Always have a car payment
Cannot customize
Limited and can be complicated
Must return in great shape
18. Tips for Leasing
New or used car
Yearly mileage
Can you take care of interior/exterior
Do your research
Type of car
Visit dealers to determine importance of features
Negotiate lease
Maintain car throughout lease
Buy gap insurance
Understand your mileage
Don’t lease the car for too long
Used Cars
20. Tips for Buying a Used Car
Set your budget.
Choose the right car.
Check reliability and ownership costs.
Locate good used cars.
Price the cars.
Check the vehicle history report.
Contact the seller.
Test drive the car.
21. Advantages of Buying a Used Car
Warranties on car
Lower insurance premium
Better for the environment
Cheaper/smaller loan
Car will last longer
22. Disadvantages of Buying a Used Car
23. Lemon Laws
What are they?
Regulations that attempt to protect consumers in the event that they purchase a defective vehicle or other consumer products or services, referred to as lemons, that do not meet their purported quality or usefulness.
How can they help a consumer?
The automatic right to return any product that fails within the first 30 days of purchase.
24. Auto Insurance Tips for Adult Drivers
Take Advantage of Multi-Car Discounts
Pay Attention on the Road
Take a Defensive Driving Course
Shop Around for Better Car Insurance Rates
Use Mass Transit
Downsize Your Vehicle
Increase Your Deductibles
Improve Your Credit Rating
25. Auto Insurance Tips for Young Drivers
Good grades leads to a significant decrease in insurance
Keep up with maintenance
Become a defensive driver
NO texting and driving (distracted driver)
Understand inter-state driving laws
26. Tips to Negotiate the Price.
Don't buy a car in a hurry or unprepared
Check all the numbers and ask for the out-the-door price
Read online reviews of the dealership before you begin negotiating
Plan to spend a chunk of time at the dealership
Eat before you go. Be prepared for all the car buying paperwork. Shop midweek rather than on the weekend.
Negotiate interest rate, trade-in and the other products that are available for sale, such as undercoating or an extended warranty
Pre Approved from a bank or credit union before visiting car dealers is a smart move
If you get uneasy, ask for the sales manager and request a different salesperson
Get quotes from several new car dealerships
Always remember to walk out if you don't reach a deal you like
Don't forget to discuss details such as warranty limits, loan and financing offers, or any add-ons the dealership might have included in your pricing
27. Warranties - definition and should I buy one?
New Car - What’s included?
Covers every part your new car had when you bought it
Should I pay for an extended warranty?
An extended car warranty may save you some money if your car ends up needing repairs that are covered under the plan. But many people who buy extended warranties never use them. To decide if one is right for you, weigh the cost of the warranty against the likelihood you’ll need to use it and your ability to pay for repairs without a warranty.
Used Car - Should I buy one?
We don't recommend buying an extended warranty on a used car
Definition: A written guarantee, issued to the purchaser of an article by its manufacturer, promising to repair or replace it if necessary within a specified period of time.