1. CAR BUYING PROCESS
PERSONAL FINANCE

2. Phase 1 – Before you Shop Identify your wants and needs
What features would you like
Prioritize your wants
Be realistic about your needs
Identify and Research Choices
Consumer Reports, Edmund’s, Car and Driver

3. Phase 1 – Before you Shop Determine what you can afford
Budget for maintenance costs, gas, insurance
Decide how you will pay
Pre-Approval – being qualified for a certain amount for a loan prior to buying a car, good for days
Check Insurance Rates
Call your insurance agent for a preliminary quote

4. Phase 2 – Evaluating Alternatives
Search for Available Vehicles
Internet, Classified ads, Auto Trader, Dealerships
Test Drive Vehicle
Decide whether to buy New or Used
New: Loses 20% of value in the first year; will probably come with warranty
Used: Typically no warranty; will be less expensive than buying new

5. Phase 2 – Evaluating Alternatives
Check History of Used Vehicles
Use Vehicle Identification Number (VIN) to check car’s history using Carfax; will list all previous owners, accidents, mileage at each sale
Get Used Vehicle Checked Mechanically
Have a mechanic conduct compression test, check the transmission, tires, brakes, etc.
Ask the seller for records of maintenance, emissions test, and inspections

6. Phase 2 – Evaluating Alternatives
Research Price
Check Kelley Blue Book
Fair price based on year, mileage, condition of car (used cars)
Sticker price – Manufacturer’s Suggested Retail Price (MSRP); posted in the window
Invoice price – what the dealer paid for the car
Negotiated price is likely to be 3 to 6 percent above invoice price

7. Phase 3 – Making the Purchase
Negotiate the Price
Make your initial offer lower than the maximum you are willing to pay
Negotiate new car price separate from the trade-in
Do not let your emotions show
Sell your old car rather than trading it in if the dealer does not offer you a reasonable amount

8. Phase 3 – Making the Purchase
Financing Your Car
Loans are offered in 36, 48, 60 and 72 month terms
Longer terms mean you pay more in total
Compare interest rates
Can finance at most dealerships through finance companies
Watch for promotions

9. Phase 3 – “Making the Purchase” Lease Option
Renting car for set contract period
Can buy out car at end of lease
Usually limits mileage
No large down payment required
You do not own the car at the end of the lease

10. Phase 4 – After the Purchase
Maintenance and Repairs
Yearly state inspection/emissions test
Oil changes every few thousand miles
Tune-ups
Major repairs
Tires

11. Consumer Protection
Warranty – written statement about the car’s quality; protects certain parts for stated time period
Warranties usually run out after stated time or mileage, which ever comes first
Service Contract – “extended warranty”; separately purchased agreement to cover repairs (extra cost)
Lemon laws protect owners who bought “lemons”; allows you to get a new car or your money back

12. Lemon Laws What is a lemon vehicle? What are lemon laws?
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