G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona DO NOW TERMS 1. M.S.R.P. 2. NEGOTIATED PRICE 3. DOWN PAYMENT 4. EXTENDED SERVICE CONTRACT 5. “BLUE BOOK” VALUE

Researching an Automobile What should I look for? ratings/automotive/index.htm

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Car and driver best cars for CpA CpA

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Best of the Detroit Auto Show Highlights from the 2013 North American International Auto Show of-the-detroit-auto-show/tbhhdo2

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Transportation Part of everyone’s life 15 – 20% of an individual’s budget Automobile tends to be the 2 nd most expensive purchase, only after a home

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Want to Buy a Vehicle? Consumers should plan their vehicle purchase to avoid any costly mistakes Any large purchases should be planned Places to purchase a vehicle: Dealership, private owner, internet

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Planned Buying Process for automobiles 1. Prioritizing wants 2. Pre-shopping research 3. Fitting the budget 4. Comparison shopping 5. Negotiating 6. Making the decision 7. Evaluating the decision

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 1 - Prioritizing Wants Assess transportation needs and wants Need: something thought to be a necessity Want: something unnecessary but desired Consider all automobile options as wants Prioritize the wants from low to high priority Consider costs and benefits of different vehicle options Consider the “big picture” of the vehicle purchase rather than a specific want (such as heated seats, color, engine size, etc)

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Prioritizing Wants – Questions to Think About How will the vehicle be used? Where will the buyer be living? How will the vehicle be stored or parked? How much will it be driven? What options would the buyer like in the vehicle? Celebs and their cars:

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 2 – Pre-shopping Research Research should be based on transportation wants Complete this before visiting a car dealership or salesman Helps the buyer to be informed about: What they are looking for Vehicles in their price range Available options

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Ways to Perform the Research Family & friends Experiences with different makes and models of different vehicles Likes, dislikes, and recommendations Online Research Consumer Reports Federal Citizen Information Center Kelley Blue Book Motor Trend Car and Driver

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Price Research Base price: vehicle price with standard equipment, no extra options MSRP: Manufacturer’s suggested retail price Includes base price, price of options installed by manufacturer, and their transportation charge Sticker Price Dealer’s initial asking price

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Price Research continued Determine how much a dealer paid to help decide which vehicles to consider and to negotiate a fair price Consumer Reports, Kiplinger’s Personal Finance magazine, and Edmund’s New Car Prices Used cars Blue book price: dollar value given to the vehicle based on its year and model Used as a guide for dealers & banks for pricing trade-ins Kelley Blue Book

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Vehicle Options Research General type of vehicle Car: luxury, compact, sedan, subcompact, truck, SUV, sports car Make and model Ford Explorer, Honda Accord, Nissan Altima Safety Braking and emergency handling, airbags Reliability Some specific models have high marks, may be higher priced but will save on repair costs

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Vehicle Options Research (continued) Fuel economy Type of gas used, gas mileage Power and performance Driving on highways, steep hills, mountains, snow, muddy roads, or in a city Comfort and convenience Size of headroom and legroom, cargo space

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Vehicle Options Research (continued) Insurance Chosen vehicle affects the price of insurance; obtain a quote for the vehicles being considered Other options Power steering and brakes, manual or automatic, air conditioner, rear-window defogger, radio/tape/CD player, type of tires, cruise control, sun roof, heated seats, power door locks and windows, etc.

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona New vs. Used Research New Vehicle: Not pre-owned Warranty Manufacturer options Wide selection Expensive Depreciation Loss in the vehicle’s value due to time and use (greatest cost) Used Vehicle: Cost less to buy Cost less to insure Avoid rapid deprecation Wide selection May offer warranty Returned leased cars Have an independent mechanic inspect any used car before purchase

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 3 – Fitting the Budget “Can I afford it? - Most important question Amount the buyer can afford in his/her budget dictates the vehicle price All costs must be taken into consideration before choosing a vehicle For those that enjoy owning a vehicle for a long time without fear of excess mileage or wear and tear, purchasing is the best option.

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Buying VS. Leasing The benefits to either are based on your unique needs. The leasing option is great for those that want to drive a more expensive car for a lower monthly car payment without worrying about vehicle depreciation. Leasing has two principal benefits: (1) You can drive a newer vehicle that is always under warranty and seldom needs more than routine maintenance, (2) you can often get a larger, more luxurious, better-equipped car. Owe a down payment, and a monthly payment for the lease term (usually 3 or 4 years)

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Fitting the Budget continued Fixed expenses Depreciation Insurance costs Loan payment and interest if financed Parking fees Licensing Registration Flexible expenses Maintenance Gas Oil Repairs *Vehicle price is not the only cost involved

Stop to complete activity

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona DO NOW TERMS…. 1. AMOUNT FINANCED 2. APR 3. FINANCE CHARGE 4. MONTHLY PAYMENT AMOUNT

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Planned Buying Process for automobiles 1. Prioritizing wants 2. Pre-shopping research 3. Fitting the budget 4. Comparison shopping 5. Negotiating 6. Making the decision 7. Evaluating the decision

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 4 – Comparison Shopping Goal of comparison shopping: Narrow the choice even further to negotiate for the best deal Comparing services or products to determine the best buy or quality product at a fair price Allows the consumer to build upon the information learned in the pre-shopping research *As the price of a vehicle increases, consumers are often not buying additional safety, capacity, or power, but instead style and prestige

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Comparison Shopping continued Narrow the choices to a few specific makes and models with desired options Visit the appropriate store to learn more information about each choice to make comparisons Inquire about price, dealer incentives, financing options, leasing, warranties, and service contracts Test drive each potential vehicle

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 5 - Negotiating Process of deciding the actual terms of the purchase and agreement between the seller and buyer Obtain a firm price before discussing any other aspects including a trade-in Compare prices from different dealers Let them know you have done your research and whether their price is high

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Negotiating continued Keys to all negotiations Be able to say NO Take the purchase to another business Always know the BLUE BOOK Value NEVER tell the salesperson a monthly rate you’re willing to pay. Tell them the Max you’re willing to borrow!

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 6 – Making the Decision NEVER PAY MORE THAN YOUR ORIGINAL BUDGET – forget about monthly payment The best place to decide on which vehicle to purchase is NOT the showroom where you are around the dealer Take the information home to compare all options After making the decision, return to the dealer to close the sale

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 7 – Evaluating the Decision Think about the things which went well and what did not This will be helpful the next time a similar purchase is made If the process was successful and you are happy, compliment the seller If you have a complaint, make the complaint known to the seller then move to the supervisor if necessary

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Lemon Laws Lemon – only applies to new cars A vehicle in and out of the repair shop with problems monthly Defect remains unfixed after four repair attempts or the vehicle remains in the repair shop for a total of 30 days An estimated new 150,000 vehicles sold each year are lemons.

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Lemon Laws continued To fall under the lemon law New vehicle must have a substantial defect which cannot be fixed in a reasonable time Defect remains unfixed after four repair attempts or the vehicle remains in the repair shop for a total of 30 days This allows the consumer the right to a refund or a new vehicle

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Lemon Laws continued What should you do if you feel you have purchased a lemon? Contact the state’s attorney general office to request information on the state’s lemon laws and how to use them if they have purchased a lemon

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona WARRANTY If you buy a new car or a certified pre-owned car, in order to qualify for warranty promises, you must follow the manufacturer’s requirements: Example – Nissans, you must get oil changes from a Nissan Dealer every 4,ooo miles

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Conclusion Before purchasing a vehicle, follow the planned buying process to avoid a costly mistake 1. Prioritize wants 2. Pre-shopping research 3. Fit the budget 4. Comparison shop 5. Negotiate 6. Make the decision 7. Evaluate the decision