Selling & Buying a Car

What to know? How much can you spend every

month?

What are Benefits to new, used & leases?

Should I Buy or lease?

Do I have a Down payment or Trade-In?

What is the current Interest Rates?

What is the current Sales Tax?

Am I driving for Style, Comfort, Family?

Buying a Car: Starts with what you

currently have!!!

Car Ownership Importance to your future?

Do you need to drive (maybe not if you live in a large city)

You need insurance to drive

Cars require maintenance

Credit/Loan

How could buying a car help your credit?

Types of Credit: count for roughly 10% of your credit score

Installment Plan: Monthly Payments provethat you are trustworthy

Where do you get a car loan?

Prior to Buying Options: 1. Down payment- Cash you put

down for a car. Lowers payments & banks like.

2. Trade-In- Provide dealer with your current car and they buy it off you.

3. Combination of both

4. Neither

DownpaymentCash you have to pay for car.

This lowers the principal (amount you owe)

Example: $20,000 with $5,000 down = $15,000 Loan

You do not need a down payment

Selling your Car

Trade-inDealer buys your car off youReminder: They are trying to

make money off you. Goes for down payment on

next carTypically dealers Offer you less

but much easierBenefit for buying cars- turn

one in

Selling Your Car

Private Party Sale- Sell by yourself

Cars.com, craigslist, put a sign on car

Costs of advertisement and title

Will get more money off sale

What is my cars Value?Cars.com, nada.com, edmunds

Kelly blue book (kbb.com)

An advantage to owning your car

Go to Kbb.com (Kelly Blue Book) to start

project

Depreciation

http://www.money-zine.com/Calculators/Auto-Loan-Calculators/Car-Depreciation-Calculator/

Depreciation - Cars lose value once you drive them

20% to drive new car off the lot, that is $6-8,000 off a $22,000 and $10-12,000 off $40,000 car, it is more like 35%

65% in first 5 years

Consumer Reports

Some models depreciate slower

Total a car in crash- only covers the principal, not interest.

So if you crash a new car early, you will have paid more in interest than later

http://www.consumerreports.org/cro/index.htm

Are cars a good investment?

No- not a good investment

Get you from point A-B

Include maintenance, oil, tires, interest, insurance could mean $$$ every year

It is an asset that keeps going down in value and becomes less reliable

How to minimize depreciation?

Buy slightly used cars 1-3 years

Still have warranties, minimal miles

If you buy new, keep it for a long time

Stay on top of maintenance, cars can last 200,000 miles

Buy older cars, less depreciation but old car and more likely to have problems

Financing Car (buy)24, 36, 48, 60, 72 months

Loan by bank or dealer- check this out interest rate higher can cost you

More months = less monthly payments

More months = more interest

FinancingKnow the APR- Annual Percentage

Rate- the interest rate on the loan

The lower the APR- the cheaper the car

Default- Failure to make payments on the car. Results in repossession of car.

Use Bankrate to see costs of loan

http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx

Change the payment options

Change interest rates

3 YR. 15,000 LOAN

`

4YR. 15,000 LOAN

Leasing vs. BuyingBuying- pay for the car and

you own it

Leasing- is payment for use of car but will turn back to dealer after several months

Leasing TermsLease- long term rental and

allows specific period of time and mileage.

Mileage limit- The max distance a vehicle can be driven during a lease

Excess Mileage charges- Penalty at end of lease if vehicle went over mileage limit

Early Termination Fee- Penalty paid for withdrawing or ending a lease early

Leasing Terms cont...Lease Payment- The amount you pay

every month for the lease of a car.

Lessee- The person leasing (driving) the car

Lessor- The company (true owner) of the car, who you pay

Term- The length of the lease. 24,36 etc..

Reasons to Lease

New car every 2-3 years

Lower monthly payments

Car under warranty or dealer protection

Don’t like buying or selling car

Don’t drive a lot of miles per week

Will pay more over the long haul.

Leasing PaymentsDepreciation charge goes to

dealer- depreciation

Finance charge added to payment to cover

Dealer gets the car back- you don’t get anything

Reasons to Buy

Don’t mind higher payments

Like having trade in and resale value

Prefer to be equity free after done with payments

Don’t mind unexpected breakdowns

Drive many miles

Unexpected future

Buy Used or NewUsed Good: Depreciation, Resale,

Drive a lot, lower payments than new

Used Bad: Breakdowns you pay

New Good: Less mechanical issues, warranty, Style, Drive a lot

New Bad: Depreciation, higher payments

Buy TermsSticker Price- The price on the

sticker of the car. Cars should always be bought below sticker unless brand new

MSRP- Manufactures Suggested Retail. The suggested base sale price.

PaymentsPrincipal- Amount the car costs

(sticker price)

Interest- The amount to finance the car

Monthly Payment- Principal and interest. Paying for car and the loan.

Certified Pre-OwnedCPO- Certified Pre-Owned- means

dealer did inspection on car and passed test.

Incentives to BuyRebates- Money off car sale prices

money off the MSRP- Manufactured sticker retail price

Little or no interest (finance)

0% financing- Pay no interest

WarrantyWarranty: New cars usually

have 3-5 years for major breakdowns. Bumper to Bumper.

Tires, Wipers, dents etc... not covered

Extended- Dealerships offer extensions to these. Have to do math to see if worth it.

What do they cover? Transmission, engine- these can be expensive to fix.

Decisions?

Choose based on personal preferences

Gas Mileage

Resale and length you will have

Family or Single? Passengers? Safety?

Looks, style

Buying UsedNever offer full price.

Used car prices are negotiated.

Make sure to print off Kelly blue book sticker price and look at other similar cars before you accept any offer.

Car AccountIt is easier to plan for the

maintenance.

Make sure you have $ in account

If you don’t pay they repo the car, make sure you can pay.

MPG - Miles Per GallonCity - Start and stop causes

worse mileage

Highway - Better mileage

SUV and trucks worse than car

Electric cars-

Other costsInsurance (Average $400 per half)

Sales tax

Tires

Oil changes

Wipers and other broken parts