Chapter 6 Part 2Buying a Car

Important Car Buying Trade-OffsThe smaller the engine, the less gas it burns

Give up better acceleration and powerNewer Automobiles Cost more

Require fewer repairsSmaller vehicles are more energy efficient;

easier o move and parkLarger vehicles protect people better

Can you think of any others??????

Two types of vehicles

Costs of Buying a CarOpportunity Costs of Buying outright: Money

and time spent shoppingThat money could be used on other things

Opportunity Costs of the Car loan:The loan with interest added

Costs of OperationRegistration fee: Annual fee paid to state

government to run a vehicleCosts depends on many factors

Maintenance: Minor Maintenance: Oil Change (Tune Ups)

Frequent service=longer lasting vehicleMajor Maintenance: High Cost

Do your research!

Extended Warranty:

Two last vehicle CostDepreciation: Decline in value over time

Age, obsolescence, and wear and tearInsurance:

Making the Best ChoiceTalk to friendsRead Consumer ReportsComparison Shopping: DealersWarranty ComparisonTest DriveSafety FeaturesGet used cars inspected

Getting a Good DealWindow Sticker: Suggested Retail PriceWatch for sales and promotions:

RebatesAPR Specials

Buying vs. LeasingLease: contract for use of a vehicle for a

specified termPurchase option: After term is up, you can buy

Why Lease?No down paymentDoes not tie up creditPay only for what you use

Ways of PurchaseCashFinancing

Either through the dealership or lending company (Bank)

Fixed Rate: Rate remains the sameVariable Rate: Fluctuates according to

market index

Buying a Used CarCheck “Buyers Guide Sticker”

Required on all used cars by lawStates any warranty info or “As Is”States you should get vehicle inspectedStates you should get all promises in writing“As IS”

No Warranty Dealer has no further responsibility

Implied Warranties Warranty of Merchantibility: product will do what its

supposed to Warranty of fitness for a specific purpose

Ex. It will haul a trailer

Buyers Guide

INSURING A VEHICLEA. No-Fault Insurance – Passed in 1976

- everyone must have no-fault insurance- When an accident occurs each owners insurance company will pay

immediately by their insurance company. Insurance companies will

investigate who was at fault and settle up later.

INSURING A VEHICLE

A. Liability Insurance- pays for damage to other person’s car and injury

- required insurance “minimum insurance”B. ND minimum

- Bodily injury: $25,000/$50,000 - Property: $25,000 per accident

INSURING A VEHICLE

A. Comprehensive Insurance: - Covers your vehicle for damage/loss that occurs from theft, damage by flood, fire, or glass breakage.

B. Collision:- Pays for damage to your car caused by collision (less

the deductible.

INSURING A VEHICLE

A. Uninsured/Underinsured- covers your losses if someone at fault has no insurance.

B. Deductible- amount one must pay before insurance kicks in

C. Premium- payment for insurance