CHAPTER 16

BUYING AND OWNING A VEHICLE

CHAPTER 16

BUYING AND OWNING A VEHICLE•16.1 BUYING A VEHICLE•16.2 INSURING A VEHICLE•16.3 ENVIRONMENTAL CONCERNS

BUYING A VEHICLE

DO YOUR NEEDS REALLY JUSTIFY OWNING YOUR OWN CAR?

CAN YOU AFFORD IT?•PURCHASE PRICE•DEPRECIATION

–Vehicles value steadily drops over time

•FINANCING–Shop around and look for best rate

•OPERATING COSTS–Fuel, oil, tires repairs, replacement parts, licensing fees, registration, insurance, taxes, etc…..

WHAT KIND SHOULD YOU BUY?

•What will it be used for?•Passengers, cargo?•How many miles?•Keep it how long?

VEHICLE SIZE•Smaller, lighter = better gas mileage but does not offer as much protection•Smaller = easier to maneuver•Larger = more comfortable but more costly•Larger = greater capacity for passengers

OTHER DECISIONS•ENGINE

–Smaller more fuel efficient–Larger more powerful for working

•TRANSMISSION–Most automatic with overdrive–Manual last longer, harder to learn

•OPTIONAL EQUIPTMENT–Technological advancements means lots of toys!

LEASING•Cheaper than buying•When lease is over you:

–Return the vehicle and lease another–Purchase the vehicle at reciprical value–Return the vehicle with no obligations

BUYING USED VEHICLE•Buying from private owner may cost less but no warranty•Used car dealers usually have a better selection•Some now offer certified pre-owned warranties•Read warranty carefully •How much should you pay?

–Kelley’s blue book

CHOOSING A USED VEHICLE

•Make sure looks good and is in good mechanical condition•Need to know if it was ever involved in collision before•If possible talk to previous owner

OUTSIDE AND INSIDE CHECKS

•Doors and locks•General appearance•Fluid leaks•Evidence of collision damage•Condition of seats•Lights and accessories•Mileage•Pedals & steering•Spare tire and jack•Hoses, belts, and fluids•Battery and cables

TEST DRIVEAlways test drive – make sure everything works and the car drives well.

HAVE VEHICLE INSPECTEDTake it to a trusted mechanic and have them inspect it.

INSURING THE VEHICLEEvery state has financial responsibility laws.Requires you to prove that you can pay for damage that you might cause

KINDS OF INSURANCE

LIABILITY INSURANCEProtects the driver who caused the collision.Provides compensation for a harm or wrong to a third party

BODILY INJURY INSURANCE

Covers the driver who is at fault against claimsClaims for injuries to other people

PROPERTY DAMAGE INSURANCE

Protects the driver who is at fault against claims for damages to another person’s property, up to specified limits

MEDICAL PAYMENT INSURANCE

Pays medical and funeral expenses for bodily injuries sustained by occupants in the insured vehicle

NO-FAULT INSURANCEIn some states, people can recover losses and expenses from their own insurance company regardless of who is at fault

COLLISION INSURANCEProvides coverage to pay the costs of repair or replacement of your vehicle

COMPREHENSIVE INSURANCE

Pays for damage to your vehicle for reasons other than collisions

UNINSURED AND UNDERINSURED MOTORIST

Protects you if you are hit by another driver who has too little or no insurance.

INSURANCE RATES

•DRIVING RECORD•AGE•MILES DRIVEN•GENDER•MARITAL STATUS•TYPE OF VEHICLE•WHERE DRIVER LIVES•DRIVER’S CLAIM RECORD

PREMIUMS

The amount you agree to pay each month/quarter/year for insurance coverage

DEDUCTABLE:

A set amount that you agree to pay in the event of a claim before the insurance company pays the difference.

HIGHER DEDUCTABLE = LOWER PREMIUM

LOWER DEDUCTABLE = HIGHER PREMIUM

So if……….

Mr. A was in a collisionThe damage to his cars was $4,500His deductable was $500How much dies the Insurance company

pay?How much does Mr. A pay?

REDUCED PREMIUMS

•GOOD GRADES•NO CLAIMS OR CONVICTIONS FOR THREE YEARS•SAFETY FEATURES

ASSIGNED RISK INSURNACE

Drivers who have had their insurance cancelled due to poor driving recordExtremely high premium for several years

ENVIRONMENTAL CONCERNS

EXHAUST GASES•CARBON DIOXIDE•CFC’S

DISPOSAL OF VEHICLE PARTS AND FLUIDS

Vehicle batteries, oil filters, oil, gasoline, transmission, fluid, brake fluid, and antifreeze are hazardous substances.Never dump or put these in the garbage.Service stations usually provide reclimation for these used products

HOW CAN YOU HELP?•MASS TRANSPORTATION•CAR POOLING•ALTERNATIVE FUEL

Mr. A’s Insurance

Property Damage Liability 10,000

Bodily Injury Liability 30,000 per person/60,000 MAX

Medical Payments 30,000/60,000 MAX

Collision 20,000/ 500 deductible

Mrs. B

Hospital Bills $34,000

Damage to Car $5,500

Mr. A Caused a Collision

Hospital Bills $22,000

Damage to Car $6,000

1. How much will Mr. A’s Insurance pay for Ms. B’s Hospital Bills? How Much Will Mr. A pay?

2. How much will Mr. A’s insurance pay for damages to Ms. B’s Car? How much will Mr. A pay?

3. How much will insurance pay for Mr. A’s injuries? How much will Mr. A pay?

4. How much will insurance pay for damages to Mr. A’s car? How much will Mr. A pay?