Managing your Personal Finances Unit 3: Buying The Right Car For You 1.
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Transcript of Managing your Personal Finances Unit 3: Buying The Right Car For You 1.
Managing your Personal Finances
Unit 3:Buying The Right Car For You
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Do Now
Please discuss the types of cars that your family owns:
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Goals of the Day:
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I can:use the Internet to research used carsidentify the Year, Make and Model of a carunderstand the terms depreciation, MSRP and Trade-Incalculate depreciation
And the notes begin:The myth about car payments
Auto companies want you to believe that car payments are a way of life! Does not have to be true, most self-
made millionaires drive good used cars and avoid car payments.
Everyone else has an average car payment of $475 per month.
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Some definitions…
Make – Automobile company brand of cars, such as: Chevrolet Ford Honda Mercedes Benz
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Some definitions…
Model – name of a specific car within a brand, such as: Chevrolet Tahoe Ford F150 Honda Civic Mercedes Benz C Class
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More definitions…
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Body style:
Some definitions… MSRP – manufacturer’s suggested retail
price
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Some more definitions…
Trade-in – a used car that is sold to a new car dealer as part of the down payment for a new car.
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Some definitions… Depreciation – over time a car
experiences wear and tear and becomes less desirable to own, so its value decreases. New car loses 25% of its value when you
drive it off the lot A typical four year old car has lost about
70% of its value
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For example…
2013 Honda Accord EX MSRP - $26,665 Driving it off the lot drops it’s value to
$20,000 ($26,665 * 75%) Driving it for four years drops it’s
value to $8,000 ($26,665 * 30%)
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Drive Free
’63 Plymouth Valiant (purchased by Mr. Knopp in 1975$120/$110)
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Drive Free
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Bought by Mr. Knopp in 1976: ’69 Chevette (3 speed) - $600
First Car
You have $3,000 to buy your first car
Look for a suitable car at Kelly Blue Book www.kbb.com
(other sites including Edmunds, nadaguides.com or Google used cars-New Jersey can provide similar
information)
Click on Cars for Sale, then Show me Cars that Meet My Needs.
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First Car-Continued
Under Show me Cars that Meet My Needs (stay within 75 miles of Mt. Holly)•Adjust Price Range (remember, you have only $3,000 to spend)•Select Body style•Select Fuel type, Drive, Engine, or Color (if you have a preference; t e more you select, the smaller your vehicle choice)•Select View (the orange button)
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First Car-Continued
Select one of the cars that meet your needs…
On the form provided, write down the Year, Make, Model, Mileage and Price.
You will keep this car for a year You will save $250/month toward a better car
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Second Car-Continued
You will total the money left over from the $3,000 you had available for the first car (if any), the money you saved ($250 per month you save) and the trade-in value of your first car (less 20% depreciation). This is the Available Funds you can spend on Car 2.Again, look for a suitable car at Kelly Blue Book
www.kbb.com17
Third Car
You will total the money left over from the purchase of your second car (if any), the money you saved ($350 per month you saved) and the trade-in value of your second car (less 25% depreciation); this will be the Available Funds you can spend on your third car.
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Third Car-Continued
Again, look for a suitable car at Kelly Blue Book
www.kbb.comOn the form provided, write down the Year, Make, Model, Mileage and Price.You will keep this car for as long as possible (hopefully it gets you through college)
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Third Car-Continued
Once you find Car 3, print a picture of the car that you could have in only 2 years with smart financing!
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Exit Ticket(optional)
1. Please pretend that you are trading something of value with your neighbor. What price tag will you put on the item you are trading?
Example: $1.75 $2.00 for
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Exit Activity
Your goal is to purchase a car in 12 months. The price of the new car is $8500.00. Your current used car is worth $3500.00 and it will depreciate in value 25% over the next 12 months. You will be using your car as a trade in.
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Goals of the Day:
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I can:use the Internet to research used carsidentify the Year, Make and Model of a carunderstand the terms depreciation, MSRP and Trade-Incalculate depreciation