Transcript Your First car

FFIB Program
Finance-Fraud-Insurance-Banking
and you…
Why Are We Here?
Teens Between 13 – 18 Spent
$155,000,000,000 in 2000.
Source: Stages magazine, “Fiscal Fitness for
Teens,” Summer 2001 Issue.
Your
experience
is limited.
You are a
Prime Target
for
SCHEMES & SCAMS
PERSONAL DEBT
The average college undergraduate student has $2748 in credit card debt.
At 18% interest, and paying $50 per month, it will take 9.5 years to pay
this debt off.
Source: Stages magazine,”Fiscal Fitness For Teens.” Summer 2001 issue.
Your First Car:
Have you thought about….
•Needs vs. wants
•New -- Rebates and other incentives; new car warranty
•Used -- “as is” -Lemon Law (does not apply to used autos)
•Financing or cash
•Reputable, licensed dealership
•Accurate/fair pricing – check book values
•Insurance costs, maintenance/gasoline costs
•Can you pay for it ? Live with it ?
Buying a Car:
How will you pay?
•
•
•
•
•
Lot Financing “on the spot”
Bank
Credit Union
Credit Card
Cash?
•leasing a car is an option
Negotiate!!!
• Prices
• Interest rates
• Trade in
allowances
• Down Payment
Signed Contracts are Final!!!
Consider the “Real” Car Costs
•Do you have a trade-in?
•Is there a lien or outstanding loan on the car?
•What payment can you live with?
•What is the interest rate?
•How many payments?
•“Out of Pocket” Repair Expenses?
•What is the cost of the insurance premiums?
•Don’t forget Other costs such as tag, title, or
registration
True Cost of 95 Mustang
Itemization of Amount
Financed
Cash Price
$5,900.00
Down Pmt
-900.00
Unpaid Bal
5,000.00
+ Tax
+ Doc Stamps
18.00
+Tag/Title
35.00
Optional:
+Credit Life Ins 107.00
+Add-Ons.
1,000.00
Amt Financed $6,160.00
Amt Financed
Finance Charge
$6,160.00
3,141.60
Total of Payments
$9,301.60
RATE / MONTHLY PAYMENT
COMPARISONS
CREDIT
UNION
BANK /
DEALERSHIP
LOCAL LOT
FINANCING
7.25 %
APR
10.25 %
APR
29.07 %
APR
$190.93
$201.59
$258.38
36 Months
36 Months
36 Months
… best deal
• Do not buy on impulse
• Take used cars to YOUR mechanic for a look before buying
• Don’t believe verbal promises of sales staff
– We owe you… Get it in writing!!
• Do not sign any papers with blank spaces, not fully completed
• Understand the payment schedule
– # of payments – is there a balloon note at end?
• Ask about any fees you don’t understand
• Ask for the opinion of someone you trust
• Be ready to “walk away” – the same deal will still be there tomorrow!
Automobile Insurance
Under state law, if you own a motor vehicle, you must
carry
Property Damage Liability ( PDL ) and
Personal Injury Protection ( PIP )
Comp. & Collision
• Comprehensive Coverage:
pays for replacement or repair when
damage is caused by fire, theft,
windstorm, vandalism, flood, or
other non-collision damage.
• Collision Coverage:
pays to repair or replace your
automobile when you collide with
another vehicle or object, or your
vehicle is overturned.
Banks and other lending institutions will require
comprehensive and collision when a car is financed.
Force Placed Insurance
The Deductible is what will come out of
your own pocket, after a crash.
Comprehensive & Collision
You Pay!!!
Insurance Pays
Deductible:
Damage:
Coverage:
$2,000
$1,800
$0
Full Coverage ?
NO SUCH THING !
The Deductible is what will come
out of your own pocket, after a
crash.
PIP
Medical Expenses:
$10,000
Deductible:
$2,000
You pay the deductible, plus 20%
of medical expenses ($2,000)
Total You Pay: $4,000
• Driving history
• Type of vehicle you drive
• Where you live
• Your gender
• Your age
• Drivers Education
• Your grades
• How you use your vehicle (work—pizza
delivery)
The PREMIUM is the money
you pay to the insurance
company.
•Pay in full – coverage for 6 months
•Monthly payments
•Premium Finance Company*
*A high interest rate may make the premium
unaffordable.
Insurance Quotes for ‘95
Mustang
Company A
Female:
$1785
Male:
$2236
Company B
Female:
$1833
Male:
$2305
Company C
Female:
$1350
Male:
$1762
www.YourInsuranceCo.com
Remember the 1995 Mustang that
cost $5900?
What will it really cost?
•$9301.60 is the total amount financed
•Monthly Car Payment $258.38
•Monthly Insurance Payment: $312
•Total Monthly Cost of Your Car: $570.38
•Total cost: $20,533.68 over 36 months
+Don’t forget gas and maintenance!
… And then, there was Credit…
•The reputation for solvency
and integrity entitling a person
to be trusted in buying or
borrowing.
•An arrangement for deferred
payment of a loan or purchase.
Loan: A sum of money lent at interest.
Credit Sources
Banks and Credit
Unions are the Best.
The interest rates are lower.
Finance companies are less desirable.
Establishing Your Credit
Open your own
checking or
savings account –
before you turn
18.
Once you turn 18…
•Your first credit card
• Rental agreements
• Utilities in your name
• Cellular phone
Interest Rates and Penalties
•Credit Limits
•APR – Annual Percentage Rate
•Annual Membership Fees
•Over the Limit Fees
•Monthly Fees
•Late Payment Fees
•Any Incentives
•Secured Credit Cards
•Pre-paid or “Guaranteed” Credit Cards
Credit Card Sense
• Pay off the balance as soon as
possible. Make payments on time.
• Don’t have more than one credit
card.
• Check/verify all charges when you get your monthly
statement.
• Immediately notify the company in writing of any
inaccurate information.
• Save card use for special occasions or emergencies
• Never let friends borrow your credit card
• Shred unused credit card offers
• If your card is lost or stolen ….
Understand what you sign/
Know Your Rights
•Don’t hurry into a deal that you don’t understand
•Research before you buy and ask questions
•Take an experienced friend with you
•
•
•
•
ALWAYS read what you are signing
Don’t sign blank contracts
Walk away from sales pressure
GET COPIES of anything you sign, especially contracts
and policies
• Keep receipts
• Get it in writing – verbal agreements are not legally
binding
CARS
Auto
Insurance
Credit
Cards
Dangerous Waters
“Have I got a Package Deal for you!”
Pocketing
Sept. 29, 1998
Joe
Stable
Someone
Insurance Company
The Wrong Way
Sept. 29, 1998
Insurance
Stable Insurance
Company
Company
Name
The Correct Way
FRAUD
Lying can
land you in
JAIL!!
Is This Your Future?