1. Buying a Car
practicalmoneyskills.com

2. What Can You Afford?

3. Budget
Transportation should never be more than 15% of your net income.
Gas
Car Payment
Repairs
Etc.
Insurance
Registration

4. The Down Payment Commitment money
This lets the dealer know that you mean business.
About 10% of the cost of the car
A bigger down payment means smaller monthly payments and less interest.

5. Needs vs. Wants
What will you use this car for?
Where do you live?

6. Evaluate Your Credit

7. Your Credit Score
Lenders will tell you that you can afford more than you can.
Arrange financing before

8. Upside Down In a Loan
A car depreciates 18% when you drive it off the lot.
When you get home you owe more than your car is worth.

9. What does that mean? A brand new Honda Civic costs $19,875.
When you get home the value of your car is $15,900.
You lost $3,900 buying new.

10. Avoid Negative Equity Keep car until it is completely paid off.
Don’t buy a car that is too expensive.
Don’t drag out payments.
Make the biggest down payment you can.

11. Used Car
“The Millionaire Next Door” buys cars used and drives them to the ground.
Get the Kelly Bluebook value
Get a Vehicle History Report (VHR)
$10 to $15

12. Leasing? Leasing is like long-term renting of your car.
You pay for it when it is brand new, and you don’t build equity.
In my opinion it is a very bad idea.

13. Auto Insurance Price is based on Gender Age Marital Status
Men get in more accidents than women. Why? It doesn’t matter to the insurance companies
Age
Under 25 are a higher risk for accidents
Marital Status
Personal Driving Record
Where you live
Higher insurance if you live in the city

14. Auto Insurance cont. Vehicle Use Type of Vehicle Size of Deductible.
People who use the car more, pay more
Type of Vehicle
Bigger heavier cars tend to be safer.
Expensive cars are costlier to repair.
Sport cars are more of a risk that other cars.
Size of Deductible.
Bigger is Better.
Type and level of coverage.

15. Types of Insurance General Liability Collision Required by law
This insures the damage that you may cause to someone else car.
Collision
Insures your car if you cause an accident
Required if you lease or have a loan on a car.

16. Types of Insurance Comprehensive Full Coverage means all three
Covers everything else (e.g. fire and theft)
Required if you lease or have a loan.
Full Coverage means all three

17. Down the Road
Just remember, just because you own a car, doesn’t mean it won’t still cost you.
Maintenance
Repair
Oil changes
Tune-ups
Winterizing
Tires
Washes