P E R S O N A L F I N A N C I A L M A N A G E M E N T P R O G R A M Car Buying Strategies

C A R B U Y I N G S T R A T E G I E S2 Agenda The Three Deals of Car Buying: – The Purchase – The Financing – The Trade-In Legal Rights The Three Deals of Car Buying: – The Purchase – The Financing – The Trade-In Legal Rights

C A R B U Y I N G S T R A T E G I E S3 Deal #1: The Purchase Do Your Homework: How much can you afford? What type of vehicle do you want? Where will you buy? What is a fair price? Should you lease? Do Your Homework: How much can you afford? What type of vehicle do you want? Where will you buy? What is a fair price? Should you lease? At the Dealership: Questions to Ask Negotiating Tricks of the Trade At the Dealership: Questions to Ask Negotiating Tricks of the Trade

C A R B U Y I N G S T R A T E G I E S4 How much can you afford? Know these key amounts: – Total price you can afford – Down payment you can afford – Monthly payment you can afford Know these key amounts: – Total price you can afford – Down payment you can afford – Monthly payment you can afford

C A R B U Y I N G S T R A T E G I E S5 Preparing a Spending Plan Financial Planning Worksheet Handout

C A R B U Y I N G S T R A T E G I E S6 Debt-to-Income Ratio Percent Status Less than 15% Some additional credit may be used with caution. 15% - 20% Fully extended. 21% - 30% Overextended. More than 30% Seriously overextended. Seek help! Percent Status Less than 15% Some additional credit may be used with caution. 15% - 20% Fully extended. 21% - 30% Overextended. More than 30% Seriously overextended. Seek help!

C A R B U Y I N G S T R A T E G I E S7 Determining Car Payments Handout Determining Your Car Payment Your Car Payment Should Be No More Than 25% of Net Income Total 15 % to Payment 10% to M-I-O-T Maintenance Insurance Operating Expenses Taxes Your Car Payment Should Be No More Than 25% of Net Income Total 15 % to Payment 10% to M-I-O-T Maintenance Insurance Operating Expenses Taxes

C A R B U Y I N G S T R A T E G I E S8 What Type of Car do you Want? New – Mechanical Problems - fewer – Depreciation (10 to 40%) – Warranties / Extended Used – Mechanical Problems - more – Depreciation - less – Warranties / As Is New – Mechanical Problems - fewer – Depreciation (10 to 40%) – Warranties / Extended Used – Mechanical Problems - more – Depreciation - less – Warranties / As Is

C A R B U Y I N G S T R A T E G I E S9 Performance Consumer Reports Annual Auto Issue (April) Internet Websites (See Sources of Help) – Service – Repairs – Safety Ratings Consumer Reports Annual Auto Issue (April) Internet Websites (See Sources of Help) – Service – Repairs – Safety Ratings

C A R B U Y I N G S T R A T E G I E S10 What about Insurance? Get insurance quotes Figure into spending plan Raise deductible to lower premium Check your credit report Avoid lapses in coverage Be a safe driver Can cost more than car payment! Get insurance quotes Figure into spending plan Raise deductible to lower premium Check your credit report Avoid lapses in coverage Be a safe driver Can cost more than car payment!

C A R B U Y I N G S T R A T E G I E S11 Where will you buy? New Car Dealership Used Car Dealership Car Buying Service Rental Car Agencies Bank Repossessions Newspaper Classifieds Individual Owners Internet New Car Dealership Used Car Dealership Car Buying Service Rental Car Agencies Bank Repossessions Newspaper Classifieds Individual Owners Internet

C A R B U Y I N G S T R A T E G I E S12 Which Dealership? Years Complaints Sales Persons Mechanics References Years Complaints Sales Persons Mechanics References Professional Membership –BBB –NADA - New –NIADA - Used Professional Membership –BBB –NADA - New –NIADA - Used

C A R B U Y I N G S T R A T E G I E S13 Dealer vs. Private Dealer Repair Plans Cost More Some Consumer Protection Dealer Repair Plans Cost More Some Consumer Protection Private No Repair Plans Cost Less Little Protection Private No Repair Plans Cost Less Little Protection The Internet is a great resource, too!

C A R B U Y I N G S T R A T E G I E S14 More Buying Options Car Buying Services Defense Credit Unions NFCU USAA NCOA Auto-by-Tel Internet Resources Car Buying Services Defense Credit Unions NFCU USAA NCOA Auto-by-Tel Internet Resources

C A R B U Y I N G S T R A T E G I E S15 What is a Fair Price? Public Library NADA Book Kelley Bluebook Intellichoice Consumer Reports Edmunds Internet Public Library NADA Book Kelley Bluebook Intellichoice Consumer Reports Edmunds Internet What about… Base Price? Invoice? Sticker Price? Monroney? Options? Destination Charge?

C A R B U Y I N G S T R A T E G I E S16 Leasing Leasing vs. Buying Handout

C A R B U Y I N G S T R A T E G I E S17 Negotiating Information Trade-In Money Down/Deposit Discounts Like Car? Shop Twins Paying by Cash Options Road Test Extended Warranty Extended Warranty Best Time to Buy Best Time to Buy Take Your Time Take Your Time 180-Degree Turn 180-Degree Turn

C A R B U Y I N G S T R A T E G I E S18 Tricks of the Trade Car Sale Tricks of the Trade Handout

C A R B U Y I N G S T R A T E G I E S19 Deal #2: The Financing Where to Finance The Cost of Money: Finance Charges Contracts Common Financing Pitfalls Where to Finance The Cost of Money: Finance Charges Contracts Common Financing Pitfalls

C A R B U Y I N G S T R A T E G I E S20 Where to Finance Banks/Credit Unions – Secured loans Dealerships Finance Companies The Internet Banks/Credit Unions – Secured loans Dealerships Finance Companies The Internet

C A R B U Y I N G S T R A T E G I E S21 Questions to Ask Car Dealers Handout Questions to Ask Car Dealers Special Dealer Promotions and Low-Interest Dealer Financing Special Dealer Promotions and Low-Interest Dealer Financing

C A R B U Y I N G S T R A T E G I E S22 The Cost of Money: Finance Charges Interest – Add-on $1000 for 1 year at 12%: $ finance charge – Simple $1000 for 1 year at 12%: $66.19 finance charge Usury laws Interest – Add-on $1000 for 1 year at 12%: $ finance charge – Simple $1000 for 1 year at 12%: $66.19 finance charge Usury laws

C A R B U Y I N G S T R A T E G I E S23 The Purchase Contract

C A R B U Y I N G S T R A T E G I E S24 Contracts Read the Fine Print Read the Fine Print Credit/Life and Disability Insurance Credit/Life and Disability Insurance Truth-In- Lending Disclosures Truth-In- Lending Disclosures Taxes, License, Registration, Title, Processing Fees Taxes, License, Registration, Title, Processing Fees Physical Damage Insurance Physical Damage Insurance Power of the Pen Mechanical Repair Coverage Mechanical Repair Coverage Dont Leave Any Blanks Dont Leave Any Blanks Car Protection Packages Car Protection Packages Take to Legal Before Signing

C A R B U Y I N G S T R A T E G I E S25 Common Dealership Financing Pitfalls Dont know your credit rating Overspending at dealership Dont know current interest rates Not pre-approved for financing Assuming zero-percent loan delivers biggest savings Intertwining the deal Too worn out to check the numbers Feeling rushed, pressured or confused. Dont know your credit rating Overspending at dealership Dont know current interest rates Not pre-approved for financing Assuming zero-percent loan delivers biggest savings Intertwining the deal Too worn out to check the numbers Feeling rushed, pressured or confused.

C A R B U Y I N G S T R A T E G I E S26 Deal #3: The Trade-in Trading vs. selling outright What is a fair price? What is dealer willing to pay? What if you owe more than its worth? Trading vs. selling outright What is a fair price? What is dealer willing to pay? What if you owe more than its worth?

C A R B U Y I N G S T R A T E G I E S27 Legal Rights State Lemon Law Consumer Leasing Act Odometer Reading Used Car Buyers Guide As Is vs. Implied/Expressed Warranty Magnuson-Moss Warranty Act State Auto Repair Facilities Act State Lemon Law Consumer Leasing Act Odometer Reading Used Car Buyers Guide As Is vs. Implied/Expressed Warranty Magnuson-Moss Warranty Act State Auto Repair Facilities Act

C A R B U Y I N G S T R A T E G I E S28 Complaint Resolution Dealer/Point of Sale Regional Manufacturers Representative Professional Associations State Attorney General/Office of Consumer Affairs Armed Forces Disciplinary Control Board Dealer/Point of Sale Regional Manufacturers Representative Professional Associations State Attorney General/Office of Consumer Affairs Armed Forces Disciplinary Control Board

C A R B U Y I N G S T R A T E G I E S29 Sources of Help Sources of Help Ha ndout Sources of Help Ha ndout

C A R B U Y I N G S T R A T E G I E S30 Print your Certificate Click on the following link to add your name to the certificate and print it: Car Buying Strategies