Purchasing an Automobile
Student Name___________________________________________ Date_______________________________
Step One: Your Income and Expenses
Cost of Living Reality Check:
Scenario: If your parents have been covering or subsidizing your living expenses at home or college, you probably need a
reality check before stepping out on your own. For many young adults, the combination of lower-than-expected takehome pay together with higher-than-expected living expenses can be a recipe for financial disaster.
Your Income:
Let’s start with your paycheck. You will be earning starting salary of $35,000 per year, divided in 12 months of $2,917
per month.
Monthly Gross Pay
Federal Taxes
Social Security
Medicare
State Taxes
Employment Benefits
NET INCOME
$2,917 ($35,000
Divided by 12 Months)
$331
$181
$42
$100
$150
$2,113 Per Month
($25,356 Per Year)
Your Expenses:
Now that you know how much you can expect to bring home, you can divvy up your paycheck. Here's a general guide to
help you budget your money to make sure your expenses are covered. The dollar figures in parentheses are based on
our above example of a $35,000 gross salary with a monthly take-home pay of $2,113 per month after taxes and other
deductions.
30% Housing
10% Utilities and other housing expenditures (including renters insurance)
15% Food (at-home and away)
10% Transportation (including fuel)
10% Debt repayment (student loans and credit cards)
10% Saving
5% Clothing
5% Entertainment
5% Car insurance and Maintenance
Your Mission: Find the perfect automobile for yourself. This workbook will guide you through the planned buying
process to evaluate your options, determine how you will pay for the vehicle and other costs associated with owning a
car.
Step Two-Monthly Payment
Describe how the automobile will be used:
How Much Can You Afford?
Directions: Use the Practical Money Skills for Life website to calculate how much can you can afford.
www.practicalmoneyskills.com/calculators > All Calculators > How Much Car Can You Afford?
Down Payment,
Trade-In Value
and Rebates:
Length of Loan
What Monthly
Payment Do You
Think You Can
Afford*
(Net Income x
10%
_____________)
Interest Rate
Sales Tax**
What is the total amount you can afford?
**Go here to learn the sales tax in your state: http://www.sale-tax.com/Utah
*When purchasing an automobile there are many expenses to consider when calculating the total cost of
that automobile. In addition to the total cost of an automobile, a person should also consider the condition and
required maintenance of an automobile.
Step Three-Conduct Research
Features Needed For Your Car
Directions: Place a check mark next to important features for how the vehicle will be used:
 Price
 Transmission
 Interior Style





(Automatic/Manual)
 Body Style
(SUV, Truck, Car)
 Navigation System
 Trunk/Cargo Space





 Towing Capacity
 Warranty
 Safety Ratings
 _________________
 _________________
Year
Gas Mileage
Fuel Type
Number of Doors
Total Number of Miles
(If Used)
 Country of Assembly
 Number of Seats
 Type of Engine
Environment Impact
Color
_________________
_________________
_________________
Directions:
Visit the Kelley Blue Book website: http://www.kbb.com/cars-for-sale.
Update your location if needed.
Answer the questions to indicate your desired features.
Click “View” to learn what models have your desired features.
Click “Quick view” next to the picture of each model and then “View full detail” to learn more about that model
including additional features. (Model Details from KBB – Specs)
6. Identify and further research three automobiles in which you are interested. Record the make, model, year and price
in the table on the next page.
1.
2.
3.
4.
5.
Prioritize Features
Directions:
1. Column one: Identify the eight most important automobile features. List them in column one in order of importance.
When applicable, be specific and identify what is important about that feature. For example, if high gas mileage is
important, rather than listing gas mileage, indicate 30+ miles per gallon.
2. Column two: Indicate why that feature is important.
3. Column three—five: Evaluate each vehicle and place a check mark  along with any applicable notes in each column
if the vehicle has that desired feature.
4. Last row: For each option, total the number of check marks.
Desired Features
Why
Automobile 1:
Automobile 2:
Automobile 3:
Listed in order of
Make:
Make:
Make:
importance.
Model
Model
Model
Year:
Year:
Year:
Price:
Price:
Price:
Totals:
Which vehicle would you select and why?
Were you able to get all the features you wanted? If
not, what trade-offs did you make?
Step Four-Spending Plan Evaluation
Financing Options
1. Identify three financing options for your desired automobile. Consider a variety of lending sources
including the banks, credit unions and online websites such as www.bankrate.com/funnel/auto.
Finance Option 1:
Finance Option 2:
Finance Option 3:
Lending Source
Interest Rate
Additional Terms/Fees
Length of Loan
2. Practical Money Skills for Life website to calculate the monthly payment for each finance option.
www.practicalmoneyskills.com/calculators
Monthly Payment
3. Identify an advantage and disadvantage for each finance option.
Advantages
Disadvantages
Which financing option would you use and why?
If you had a poor credit score, what are two ways this
could influence your access to credit and/or credit
terms?
What would happen if you pay more than the
minimum monthly payment each month?
In addition to the monthly payment, what are three
additional automobile expenses to include in your
spending plan?
Step Five-Make the Purchase
What are two ways you could minimize or reduce your
out-of-pocket transportation costs?
Would you purchase an extended warranty for this
vehicle? Why or why not?
If you have an automobile loan, what are two actions
you will take to maintain a positive credit rating?
What are two ways you will protect yourself from fraud
when purchasing an automobile?
Why is it important, and required, to have insurance for
your automobile?
Throughout the research and purchase process, what
are two strategies you can use to critically evaluate
information?
What are two steps you can take to feel confidence
with the potential lenders, dealerships and/or sales
personnel you interact with?
What items do you spend money on that aren’t
included in the major expenditure categories?