1. Researching an Automobile
What should I look for?

2. Transportation Part of everyone’s life
15 – 20% of an individual’s budget
Automobile is the 2nd most expensive purchase, only after a home

3. 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

4. Planned Buying Process
Prioritizing wants
Pre-shopping research
Fitting the budget
Comparison shopping
Negotiating
Making the decision
Evaluating the decision

5. 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
Prioritizing wants helps the consumer
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)

6. 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?

7. 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

8. Ways to Perform the Research
Family & friends
Experiences with different makes and models of different vehicles
Likes, dislikes, and recommendations
Periodicals
Consumer Reports –
Federal Citizen Information Center –
Kelley Blue Book –
Motor Trend –
Car and Driver –
Access this information at the public library and/or the internet

9. Price Research
Price
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

10. Price Research continued
Price 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 car dealers and banks for pricing trade-ins
Kelley Blue Book

11. Vehicle Options Research
General type of vehicle
Car, truck, 2-door, SUV, sporty
Make and model
Ford Taurus, Honda Accord
Safety
Braking and emergency handling, airbags
Reliability
Some specific models have high marks, may be higher priced but will save on repair costs

12. 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

13. 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.

14. New vs. Used Research New Vehicle: Used 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

15. 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

16. Fitting the Budget continued
*Vehicle price is not the only cost involved
Fixed expenses
Depreciation
Insurance costs
Loan payment and interest if financed
Parking fees
Licensing
Registration
Flexible expenses
Maintenance
Gas
Oil
Repairs

17. Stop to complete activity

18. Step 4 – Comparison Shopping
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

19. 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

20. Comparison Shopping continued
Goal of comparison shopping
Narrow the choice even further to negotiate for the best deal

21. 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

22. Negotiating continued
Keys to all negotiations
Be able to say NO
Take the purchase to another business

23. Step 6 – Making the Decision
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

24. 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

25. Lemon Laws
Lemon
A vehicle in and out of the repair shop with problems monthly
An estimated new 150,000 vehicles sold each year are lemons.
Money Troubles, 2001, Leonard
All states have enacted lemon laws
Specifics vary state-to-state and are in place to protect consumers

26. 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

27. 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

28. Conclusion
Before purchasing a vehicle, follow the planned buying process to avoid a costly mistake
Prioritize wants
Pre-shopping research
Fit the budget
Comparison shop
Negotiate
Make the decision
Evaluate the decision