Personal Finance Objective 6.02-B Students will understand options and practices for meeting transportation needs B “Choosing the Right Vehicle” Source December 2011

Factors to Consider Before Purchasing Determine what is affordable for you Evaluate your driving habits List needed features Consider vehicle depreciation costs Will you buy New or “new to you”?

What Can You Afford? Value of your trade-in Amount of down payment Budget $ available for ◦ Monthly installment payments or ◦ Monthly lease installment ◦ Lump sum payment for vehicle Investment financing options Insurance costs

Evaluate Your Driving Habits How will vehicle be used? ◦ What types of trips will be most frequent?  Local Short distance…will Electric car work? ◦ How many passengers will vehicle need to carry? ◦ How much cargo space is needed?  Need trunk to lock  Open storage (pickup truck) ◦ Will vehicle be mostly on 4 lane highways?  Weather/geographic conditions? snow, mountains, gravel/muddy roads ◦ Where will you park at home/work?

List of Needed Features Needed or Wanted? ◦ Seating ◦ Cargo space ◦ Fuel economy ◦ Commute –Electric- MPG ◦ Style: 2 door, 4 door, 2WD, 4WD, sedan, truck, SUV ◦ Safety features ◦ Specialty or convenience: GPS, CD player, DVD player, Sirius radio

Consider Depreciation Costs Biggest yearly expense for new cars is DEPRECIATION Consider a model that has a track record of holding its value for longer Research how much models depreciate within the first 5 years

New or “New to You”? New Vehicle ◦ Higher pricing ◦ Possible purchase incentives-rebates, gas for year bonuses, etc. ◦ Longer & broader warranties ◦ Wider variety of units available ◦ More variety in features ◦ Can order “custom” from factory Will you buy NEW or NEW to YOU vehicles? Both have Benefits & Detriments Consumer must weigh options and related costs to make best decision.

New or “New to You”? New to You ◦ Lower pricing ◦ Less buying incentives ◦ Warranties more limited ◦ Harder to find desired vehicle & features ◦ Less choices widely available ◦ Search longer to find desired vehicle ◦ More maintenance due to age & prior usage ◦ Get inspection to ensure quality and performance Will you buy NEW or NEW to YOU vehicles? Both have Benefits & Detriments Consumer must weigh options and related costs to make best decision.

WARRANTIES & MAINTENANCE Review Warranty ◦ Length ◦ Coverage ◦ Limitations Investigate maintenance costs ◦ Check with an auto repair shop ( a reputable or trusted mechanic) for estimated costs of  Fluids-oil changes, etc.  Parts-tires, batteries, etc.  Other repair items  Overall value of vehicle  Check out major components-engine, 4WD

INVESTIGATE SAFETY RATINGS Check with National Highway Traffic Safety Administration (NHTSA) Insurance Institute for Highway Safety (IIHS) # of airbags Vehicle “roll” factor If using car seat, chek out access to vehicle’s LATCH system

SEEK RECOMMENDATIONS Recommendations ◦ Ask friends ◦ Ask family ◦ Ask colleagues ◦ Ask your mechanic Reviews ◦ Check webwsites for expert opinions or reviews ◦ ◦ click “On New Cars”

DON’T LIMIT CHOICES Don’t get stuck on one vehicle that you can’t live without! Be flexible to get more negotiating room with seller Check out vehicles that meet your needs