Transcript Chapter 6 Part 2

Buying a Car
Important Car Buying Trade-Offs
 The smaller the engine, the less gas it burns
 Give up better acceleration and power
 Newer Automobiles Cost more
 Require fewer repairs
 Smaller vehicles are more energy efficient; easier o
move and park
 Larger vehicles protect people better
 Can you think of any others??????
Two types of vehicles
Costs of Buying a Car
 Opportunity Costs of Buying outright: Money and
time spent shopping
 That money could be used on other things
 Opportunity Costs of the Car loan:
 The loan with interest added
Costs of Operation
 Registration fee: Annual fee paid to state government
to run a vehicle
 Costs depends on many factors
 Maintenance:
 Minor Maintenance: Oil Change (Tune Ups)

Frequent service=longer lasting vehicle
 Major Maintenance: High Cost

Do your research!
 Extended Warranty:
Two last vehicle Cost
 Depreciation: Decline in value over time
 Age, obsolescence, and wear and tear
 Insurance:
Making the Best Choice
 Talk to friends
 Read Consumer Reports
 Comparison Shopping: Dealers
 Warranty Comparison
 Test Drive
 Safety Features
 Get used cars inspected
Getting a Good Deal
 Window Sticker: Suggested Retail Price
 Watch for sales and promotions:
 Rebates
 APR Specials
Buying vs. Leasing
 Lease: contract for use of a vehicle for a specified
term
 Purchase option: After term is up, you can buy
 Why Lease?
 No down payment
 Does not tie up credit
 Pay only for what you use
Ways of Purchase
 Cash
 Financing
 Either through the dealership or lending company
(Bank)
 Fixed Rate: Rate remains the same
 Variable Rate: Fluctuates according to market index
Buying a Used Car
 Check “Buyers Guide Sticker”
 Required on all used cars by law
 States any warranty info or “As Is”
 States you should get vehicle inspected
 States you should get all promises in writing
 “As IS”


No Warranty
Dealer has no further responsibility
 Implied Warranties
 Warranty of Merchantibility: product will do what its supposed to
 Warranty of fitness for a specific purpose
 Ex. It will haul a trailer
Buyers Guide
INSURING A VEHICLE
A. No-Fault Insurance – Passed in 1976
- everyone must have no-fault insurance
- When an accident occurs each owners insurance
company will pay
immediately by their insurance company. Insurance
companies will
investigate who was at fault and settle up later.
INSURING A VEHICLE
A. Liability Insurance
- pays for damage to other person’s car and injury
- required insurance “minimum insurance”
B. ND minimum
- Bodily injury: $25,000/$50,000
- Property: $25,000 per accident
INSURING A VEHICLE
A. Comprehensive Insurance:
- Covers your vehicle for damage/loss that occurs from
theft, damage by flood, fire, or glass breakage.
B. Collision:
- Pays for damage to your car caused by collision (less
the deductible.
INSURING A VEHICLE
A. Uninsured/Underinsured
- covers your losses if someone at fault has no insurance.
B. Deductible
- amount one must pay before insurance kicks in
C. Premium
- payment for insurance