1. Car Buying Tips and Terms

2. BEFORE you buy a car… Look over your budget:
Transportation needs to be 19% or less of your net income (bus/car/rideshare).
Car transportation includes:
Car Payment
Gas
Maintenance
And Insurance!

3. Example of 19% of Car Costs:
Income of $24,000; net income after taxes = $18,000
Monthly Income: $1,500 x 19%=
Transportation: $285 or less per month
Gas: $80 per month
Insurance: $133
Which leaves:
Money available for Car Payment= $72

4. Important Terms to know…
Disclosures Disclosures are information about a vehicle’s history, such as accidents or major repairs that have been made. Make sure you get a copy when you buy a car.
Trade in: cost of the vehicle you are trading in for your down payment.

5. more Terms…
Service charge When buying a car, a service charge is the fee charged by the dealer to cover their cost of preparation of the vehicle for delivery.
Title A title is a legal document that proves an individual’s ownership of property.

6. and more Terms…
Blue Book: estimated cost of the value of a used car based on options, year, mileage, and condition.
Depreciation: Amount of money the vehicle goes down in price after you buy it and drive it.

7. What are the terms in financing?
Interest Interest is charged to the borrower by the lender, as payment for the loan; it’s expressed as a percentage of the total amount loaned.
Annual Percentage Rate (APR) Not to be confused with interest rate, an APR refers to the cost of credit over the course of a year. It’s represented as a percentage, and is calculated using the amount financed, any charges, and the term of the car loan.

8. More Financing Terms
Cosigner A cosigner is another person who signs your loan and assumes equal responsibility for it.
Prepayment penalty A prepayment penalty is charged by a bank if you pay off your loan early, to make up for the lost income from interest on the loan.

9. Credit Score and You! FICO Score: Know your credit score!
High FICO = low interest
Credit Report: Dealers will run your credit via the (3) three major agencies to get your FICO – this is done by providing your Social Security Number.

10. Tips on Buying a Used Car
Know what you can spend.
Research the market.
Test drive the car.
Get the vehicle history.
Have it inspected by a mechanic.
Negotiate the price.
Always get the Title when you give the money.

11. CAUTION!!
Dealers are allowed to mark up the interest rate (to make additional profit). So, smart consumers pre-arrange financing or know their credit score before going to purchase a car.

12. Final Note
Cars are the second largest purchase decision (after housing), you make in life. It pays to do your homework!
A car is an asset you own for some time. If you make a poor decision, it becomes expensive.