1. MoneyCounts: A Financial Literacy Series
Car Shopping
11-A Grange Building
University Park, PA 16802
financialliteracy.psu.edu

2. Description
As most consumers, your decision to buy a house or a car might be the most expensive purchase you make in a lifetime.
You can purchase such an important asset in one of two ways: Buy what you LOVE and then struggle to make the payments, OR Think RATIONALLY and logically before you sign on the dotted line. 

3. Learning Outcome Learn how to decide on the right purchase
Understand how to shop for a car loan
Calculate car owning cost and operating cost
Understand auto insurance coverage
Understand warranties and extended warranties

4. Making the decision
Buy the car you love! You can make payments later!
Think rationally and logically before you buy a car! OR

5. Basis of decision – Budget
Cost of owning a car
Cost of operating a car

6. Saving for down payment?
Purchasing decision
Purchasing decision
Where to finance?
How to pay?
Saving for down payment?
Budget?
Total affordable cost?
20/10 rule?
How long?
Lease or Buy?
Co-signer?

7. If you buy a NEW car If you buy a USED car Customization New
Warranties & service contracts
Newer technology & gizmos
Environmentally friendly
If you buy a USED car
More reasonable price
Lower taxes & fees
Better insurance rate

8. STOP! First things first!
Before shopping for a car loan
Check your FICO score
Clean your credit report as necessary
Pay off all credit cards debts

9. Key terminology APR Length of loan Monthly payment Total cost of loan
Total finance charge

10. Terms of payment The more interest you will pay
The higher down payment
The longer terms of payment
The lower total cost of loan
CAR LOAN

11. Truth-in-lending Act of 1968
Informed use of consumer credit
Required disclosures
Terms and cost associated with borrowing process are calculated
Lemon Laws
Protects buyers of new vehicles from getting defective vehicles
Each State has its own perimeters of Lemon Laws

12. Prepare for the buying process
Know the difference between invoice price and MSRP
Check the website for rebate, and make sure receive all applicable rebates
Research the dealer
Wait 24 hours before you buy
Check your FICO score
Get your own financing if you find a cheaper interest rate
Compare multiple dealers
Buy at the critical time
Resist and be strong
Use this checklist

13. Auto insurance coverage
Bodily injury liability
Property damage liability
Personal injury protection
Collision
Comprehensive
Medical payments
Uninsured motorist
Rental reimbursement
Towing & labor

14. How insurance rate is calculated?
Age, sex, marital status, personal habits (smoking, drinking, etc.)
Driving record deductible and discount for additional driving training
Type and frequency of use of vehicle (how far do you drive to work, etc.)
Insurance
Rate
Type, value, and age of the car
Location and state

15. Warranties and extended warranties
As is
Extended
Implied
Warranty
Manufacturer
Dealer

16. Evaluating cost vs. benefit
Additional Cost
Additional Benefits

17. Evaluating cost vs. benefit
Is the additional cost worth the additional benefit?
How much is the additional cost?
What does it cover?
Does the initial warranty cover such repairs?
Do you have to use the dealer for such repairs?
Can you use your preferred mechanic?
Can you cancel and get refunded a portion at a later date?
Does it require a deductible?
Does it save you money if such a repair is needed?

18. MoneyCounts: A Financial Literacy Series
Comments and questions
11A Grange Building
University Park, PA 16802
financialliteracy.psu.edu