CAR BUYING
90% of people in our culture
purchase things they can’t
afford.
To impress people they do not like.
Don’t be one of them! Especially
when you are buying a car.
Purchasing a Car
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Step 1
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Determine your needs:
Ask yourself – how are you going to use this
car?
How many people do you really want to drive
around?
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Safety features, Gas mileage, Automatic
transmission…
Purchasing a Car Cont.
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Step 2 How much can you afford?
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How much do you make? ____________
Assume you made $15 dollars an hour and
worked 40 hours a week and your Federal
income and State sales taxes equaled 30% of
your gross income.
The Real Numbers Budgeting
Safe Percentages
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Charitable Gifts 1015%
Savings 5-10%
Housing 25-35%
Utilities 5-10%
Transportation 1015%
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Food 5-15%
Clothing 2-7%
Medical/Health 5-10%
Personal 5-10%
Recreation 5-10%
Debt 5-10%
Take your net income and multiply that by
.15=________ this is what you have to work
with.
Things to watch out for
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Did you know that
banks are poised to
offer you
approximately 30% of
your gross income in
the form of a car
loan.
 Why????
Affording the Car
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Save up until you can purchase with cash.
Take out a personal loan
Finance through the car company
Lease the car with out a down payment.
Mom and Dad buy it.
To Get A Car Loan
You need to have a past credit history
or
You need to have someone co-sign.
Someone who is willing to guarantee your
ability to pay off the loan. If you fail to
pay they are legally responsible for the
sum of the loan and will have to pay it in
full.
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Purchasing a Car Cont.
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Step 3
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Do your research at home
Use Consumer Reports to determine what cars
meet your needs
 Use Kelley Blue Book to determine the value of the
cars you have selected
 Use Safercar.gov to see if there has been a recall
on your car or if there are a large amount of
consumer complaints
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Purchasing a Car Cont.
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Now where?
Look online at various dealers and prices
on the vehicles that you want to drive.
Look at AutoTrader.com and Craigslist.
Talk to friends, mechanics and owners of
the same type of car but do not feel
obligated.
Car Fax - Step 3
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Enter the VIN (vehicle identification
number) http://vin.carfax.com
This will give you the history of the vehicle
you are interested in.
Ready to Buy?
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Check out
http://www.edumunds.com/tco.html
To find the true cost of the car you want
to purchase. Edmunds will compute car
maintenance, fuel, insurance, taxes and
more.
Make sure you check if your new car
changes your insurance rate.
But I Really Want a New
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The sales associate suggested leasing as a
way to get into a new car with out all the
risks.
Do the Math
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New cars paid with cash results in $82.00
profit
New cars financed result in $775.00 profit
New cars leased result in $1,300.00 profit
 What
would you sell?!
Do the Math
The Break Down
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If you (rent) lease a car with a value of
$22,000 for three years, and then turn it
in the car is only valued at $10,000,
someone has to cover the $12,000 loss.
Your lease payments are designed to
cover the $12,000 in 36 months plus a
profit this will equal over $333.00 a
month.
Bargain?!?!
Did You Know?
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The Auto Industry does not have to
disclose the amount of interest they are
charging you with a lease.
This is usually monitored by the FTC but
they don’t have the power here because
you are “renting” not purchasing your car.
The average leasing interest rate is 14%
Don’t Forget the Tiny Numbers
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If you go over the allotted miles you are
charged around 10-17 cents a mile.
Excessive wear and tear will penalize you
too. Option to purchase fee, doc fee, tire
fee and the early termination fees.
To Keep You Coming Back!
Dealerships will offer to roll in the charges
for your last car into a brand new
“beauty”, for only an extra $13.00 a
month…What a deal…
The Excuses
It Comes with a Warranty
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Some people want to buy or lease a new car for
the warranty.
Consumer Reports conducted a study and found
55% of those that purchased an extended
warranty did not use it during the lifetime of the
warranty.
Among survey participants who used their
policy, the median out-of-pocket savings on
repairs covered by extended warranties for all
brands was $837. Based on a $1,214 average
initial cost, that works out to a net loss of more
than $375.
The Price of, peace of mind. If you
do buy an extended warranty make
sure you…
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Don’t buy under pressure. Dealers
often try to sell the convenience of rolling
coverage into a new-car loan, but that
means you may be paying up front for
coverage that you already have with the
factory warranty.
Don’t be afraid to bargain.
You can save about $325 on average.
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Go all in. There is little difference in cost
between limited and bumper-to-bumper
coverage, which is more likely than
powertrain plans to include
reimbursement for towing, travel
expenses, and a rental car. If you’re going
to buy, get the full protection.
Read the small print. Before signing, be
sure you understand what is covered and
where you can take your car for
authorized service.
It is said
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The car payment is the curse of the
middle class. How about trying something
different?
Sources
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Created By: Chantel Sukraw
Dave Ramsey’s
 Total Money Makeover
 Financial Peace
Bank of America
http://www.bankrate.com
Kiplinger report
http://www.consumerreports.org/cro/magazine/2014/04
/extended-warranties-for-cars-are-an-expensivegame/index.htm