Chapter 12:
Transportation
Buying a car…New or Used?
What
are the pros and cons of
each option?
 Draw a line down the center of
your paper.
 On one side write “new car” and
the other write “used car”.
 Write at least 2 pros and 2 cons of
each option.
New Car
Pros





Reliable
Low Mileage
Newer
Technologies
Reduced
Maintenance
Warranty
Cons


More expensive
Lose its value
the most in the
first 3 years
 Edmunds
Used Cars
Cons
Pros



Can be more
affordable
Many options to
choose from
Warranty can
carry over from
previous owner



In some cases, they
can be more expensive
since you usually can
only finance used cars
for up to 4 years
May break down- you
don’t know ALL previous
problems the car may
have had
May have a lot of miles
Can you pay for a car?
A car loan should be NO MORE
than 15% of your gross pay or 20%
of your net pay.
 Example:




Salary of $50,000
Take home: $2,430/ month
Car Loan: $ 486 or LESS!
Can you afford a car?

You must keep in mind other expenses you
have!
 Rent/Mortgage
 Cell
Phone Bill
 Groceries
 Utilities
 Car Insurance
 Student Loans
 Maintenance for car

If all of this adds up to more than 80% of your take-home
pay...then you may have a problem!
What car is right for you?

There are many different sizes,
styles, features and options of cars.

How do you decide what car is right
for you?

What factors should you consider?
Features


Characteristics of a particular car model that
offer benefits to the owner.
 Remote keyless entry
 Side airbags
 Telescoping steering wheel/adjustable pedals
 Anti-lock brakes
Some features are standard and come
with the car, others are optional and cost
more money.
Options

Features that you can choose to
include or not include on the car.
 Sunroof
 Leather
Seats
 MP3 Player
 GPS Navigation System
 OnStar System
Buy or Lease
a Car?
Financing
More
than 80% of people who
buy new cars in the US use
credit to finance their
purchase.
Leasing


Renting an automobile for a
specific period of time.
You still make monthly car
payment, but they are usually
lower than if you took out a loan
and financed your car.
How Leasing Works...

When you lease, you are paying
for using the car for the amount
of time your lease is for...renting
a car.

At the end of the lease you can
either decide to:
1. Turn in the car to the dealership
2. Buy the car
Who should consider leasing?



Someone who likes a new car often
Someone who drives very few miles
Someone who takes care of their car
and drives safely!
 At the end of a lease term, a leased car will
be examined. Additional scratches or wear
done to the car will be taken into
consideration and you may incur additional
charges.
The Car
Buying
Process
Invoice Price

The amount the dealer paid to
buy the car from the
manufacturer.

Using this information you can
calculate a fair price and know
what you should be paying for a
car.
Useful Resources
Consumer
Reports
Edmunds
Kelley
Blue Book
MSN Autos
Cars.com
Sticker Price (MSRP)
•
The Manufacturers Suggested Retail Price
(MSRP).
“Sticker” Price (MSRP)

This price is almost always
higher then the dealer
expects consumers to pay for
the car.

9-11 % higher than invoice
price.
Public Transportation for the City
Life Style




Cost- compared to owning a car, public
transportation can be inexpensive
Convenience- Goes to most popular destinations.
Speed- can be faster than cars to get to your
destination. Subways and ferries don’t compete
with cars on freeway. Some cities even have bus
lanes.
Parking- You don’t have to worry about finding a
spot/lot.
Shopping for A Car
Open your Life-Smart Project to page 7
 Use your pay amount from the career
section This helps to determine how much you

can afford.

Search 2 used and 1 new car
- Find loan payment information
- Complete the Shopping for a Car
worksheet and the Car Search Reflection
sheet
Start
browsing for cars!
Bell Ringer
What is the purpose of auto
insurance?
 Why do you think it is against
the law to not have car
insurance?

CAR
INSURANCE
Chapter 14.2
What is Auto Insurance?
Automobile


Insurance
Arrangement between an individual
(consumer) and an insurer (insurance
company)
Protects individuals against risk from
automobile accidents
Why Car Insurance?

Used to protect you and
your car.

State law says you cannot
legally drive without car
insurance.
Full Coverage
Bodily Injury liability
 Property damage liability
 Medical payment
 Uninsured/underinsured motorist
 Comprehensive
 Collision

Activity

Read each statement and
identify which auto coverage you
believe is being described.

Try your best to choose which
option you believe describes the
scenario most accurately!
Discuss with your neighbor.
Bodily injury liability coverage


When you are legally responsible for
injuring other people in an automobile
accident.
Coverage is described by 2 numbers.
(Example: $250,000/$500,000)


1st number ($250,000)is for 1st person
injured, 2nd number ($500,000) is for all
people injured in accident.
Insurance will cover that amount, you must
pay remainder if total of accident is more.
Property Damage Liability
Coverage

Pays for damage you caused
to another person’s property.

It DOES NOT cover damage
to your car.
Medical Payments Coverage

Pays medical and funeral
expenses for you, your family
members, and other
passengers in your car
…due to injuries sustained in an
accident- no matter who
caused the accident.
Un-insured/Underinsured
Motorist Coverage
Pays
medical and damage
expense for you and your
passengers cause by a driver
without insurance or with too
little insurance to cover the loss.
It
does not cover the other
driver.
Comprehensive Coverage

Pays for damage to your car
caused by something other than
collision.
Examples: earthquake, fire, wind, hail,
and floods.

If your car is vandalized or stolen,
you car is also covered under this
type of insurance.
Collision Coverage

Pays for damage to your car
caused by colliding with another
car or object, such as a tree or fire
hydrant.

Next to liability, this is likely to be
the most expensive portion of an
automobile policy.
Deductible

Comprehensive and Collision
coverages carry a deductible.

When you are at fault, you may
need to pay the deductible
before your insurance company
will pay the rest.
Deductible
An amount you pay before the
insurance company pays anything.
Example: Suppose you are in a car accident.
Your car has $1,200 in damage and your
deductible is $500.
You would have to pay the first $500 and
your insurance company will pay the
remaining $700.
Sample Insurance Policy
Full Coverage
When you are covered in all areas
of insurance.

 Requirements



Liability
Property Damage
Bodily Injury
 Highly




in IL:
Suggested
Comprehensive
Collision
Medical
Underinsured Motorist
5 Factors Affecting Auto Insurance
Premiums
1. Driver Classification:
- Based on Age, Gender, and Marital Status
- Statistics show males under the age of 21
have more accidents, therefore if you are a
male under 21 your premiums will be higher.
2. Rating Territory
-Driving in the city vs. a rural area
3. Driving Record
- Includes accidents and traffic violations
4. Type of Car
- Cost to repair car in the case of an
accident is considered
- Statistics show certain cars are stolen
more than others - this is also taken into
consideration.
5. Claims history
Auto Insurance
Open your Life-Smart Project to page 9
 Go to www.ratekick.com to get an
estimate for car insurance

Choose age 22 to get a more
accurate quote

Enter
your gender and marital
status (single)