Chapter 12: Transportation

New or Used?  What are the pros and cons of each option?

New Car Pros  Reliable  Low Mileage  Newer Technologies  Reduced Maintenance  Warranty Cons  More expensive  Lose its value the most in the first 3 years

Used Cars Pros  Can be more affordable  Many options to choose from  Warranty can carry over from previous owner Cons  In some cases, they can be more expensive since you usually can only finance used cars for up to 4 years  May break down- you don’t know ALL previous problems the car may have had  May have a lot of miles

Can you pay for a car?  A car loan should be NO MORE than 15% of your gross pay or 20% of your net pay.  Example:  Salary of $50,000  Take home: $2,430/ month  Car Loan: $ 486 or LESS!

Can you afford a car?  You must keep in mind other expenses you have!  Rent/Mortgage  Cell Phone Bill  Groceries  Utilities  Car Insurance  Student Loans  Maintenance for car  If all of this adds up to more than 80% of your take-home pay...then you may have a problem!

What car is right for you?  There are many different sizes, styles, features and options of cars.  How do you decide what car is right for you?  What factors should you consider?

Features  Characteristics of a particular car model that offer benefits to the owner.  Power Windows  Cruise Control  CD Player  Some features are standard and come with the car, others are optional and cost more money.

Options  Features that you can choose to include or not include on the car.  Sunroof  Leather Seats  MP3 Player

Activity  Requirements & Options in a vehicle  Read each scenario and determine the needs and wants of each.

Buy or Lease a Car?

Financing  More than 80% of people who buy new cars in the US use credit to finance their purchase.

Leasing  Renting an automobile for a specific period of time.  You still make monthly car payment, but they are usually lower than if you took out a loan and financed your car.

How Leasing Works...  When you lease, you are paying for using the car for the amount of time your lease is for... A.K.A renting a car.  At the end of the lease you can either decide to: 1. Turn in the car to the dealership 2. Buy the car

Who should consider leasing?  Someone who likes a new car often  Someone who drives very few miles  Someone who takes care of their car and drives safely!  At the end of a lease term, a leased car will be examined. Additional scratches or wear done to the car will be taken into consideration.

The Car Buying Process

Invoice Price  The amount the dealer paid to buy the car from the manufacturer.  Using this information you can calculate a fair price and know what you should be paying for a car.

Useful Resources  Consumer Reports  Edmunds  Kelley Blue Book  MSN Autos  Cars.com

Sticker Price (MSRP) The manufacturers suggested retail price (MSRP).

Sticker Price (MSRP )  This price is almost always higher then the dealer expects consumers to pay for the car.  9-11 % higher than invoice price.

Public Transportation for the City Life Style  Cost- compared to owning a car, public transportation can be inexpensive  Convenience- Goes to most popular destinations.  Speed- can be faster than cars to get to your destination. Subways and ferries don’t compete with cars on freeway. Some cities even have bus lanes.  Parking- You don’t have to worry about finding a spot/lot.

Cars.com  Start browsing for cars!  Use your pay from your life smart project!

Shopping for A Car  Open your life smart project to page 7  This helps to determine what you can afford  Search 2 used and 1 new car  Find loan payment information  Complete your white sheet and the purple reflection sheet

4/22  Complete Page 7 of your Life Smart Project  Turn in: Shopping for a car sheet with purple reflection sheet attached

Shopping For A Car!  Go to Cars.com to find a car  Find your car on Edmunds.com to find the true value- use dealer price  Use the loan Calculator on Edmunds to find monthly payments

CAR INSURANCE Chapter 14.2

Bell Ringer 11/25/13  What is the purpose of auto insurance?  Why do you think it is against the law to not have car insurance?

What is Auto Insurance?  Automobile Insurance  Arrangement between an individual (consumer) and an insurer (insurance company)  Protects individuals against risk from automobile accidents

Why Car Insurance?  Used to protect you and your car.  State law says you cannot legally drive without car insurance.

Full Coverage  Bodily Injury liability  Property damage liability  Medical payment  Uninsured/underinsured motorist  Comprehensive  Collision

Activity  Read each statement and identify which auto coverage you believe is being described.  Try your best to choose what option you believe describes the scenario the best!

Bodily injury liability coverage  Used when you are legally responsible for injuring other people in an automobile accident.  Coverage is typically described by 2 numbers.  Example: $250,000/$500,000  First number is for 1 person injured, 2 nd number is for all people injured in accident.  Insurance will cover that amount, you must pay remainder if total of accident is more.

Property Damage Liability Coverage  Pays for damage you caused to another person’s property.  It DOES NOT cover damage to your car.

Medical Payments Coverage  Pays medical and funeral expenses for you, your family members, and other passengers in your car because of injuries sustained in an accident- no matter who caused the accident.

Un-insured/Underinsured Motorist Coverage  Pays medical and damage expense for you and your passengers cause by a driver without insurance or with too little insurance to cover the loss. It does not cover the other driver.

Comprehensive Coverage  Pays for damage to your car caused by something other than collision.  Example: Earthquake, fire, wind, hail, and floods.  If your car is vandalized or stolen, you car is also covered under this type of insurance.

Collision Coverage  Pays for damage to your car caused by colliding with another car or object, such as a tree or fire hydrant.  Next to liability, this is likely to be the most expensive portion of an automobile policy.

Deductible  Comprehensive and collision coverage carry a deductible.  When you are at fault, you may need to pay a deductible before your insurance company will pay the rest.

Deductible An amount you pay before the insurance company pays anything. Example: Suppose your car has $1,200 in damage. Your deductible is $500. You would have to pay the first $500 and your insurance company will pay the rest.

Sample Insurance Policy

Full Coverage  When you are covered in all areas.  Requirements in IL:  Liability  Property Damage  Bodily Injury  Highly Suggested  Comprehensive  Collision  Medical  Underinsured Motorist

Factors Affecting Auto Insurance Premiums  Driver Classification -Based on Age, gender, and marital status Statistics show males under the age of 21 have more accidents, therefore if you are a male under 21 your premiums will be higher.  Rating Territory -Driving in the city vs. a rural area  Driving Record -Includes accidents and traffic violations  Type of Car -Cost to repair car in the case of an accident is considered statistics show certain cars are stolen more than others- this is also taken into consideration.  Claims history