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Autos and Insurance

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					Purchasing and Maintaining
          Autos

      Economics 2010/11
                 Car Loans
   Length of loans—24 to 72 months

   APR at a local credit union: 4.70% -11.05%

   Average rate in Houston area = 7%

   $10,000 used car, 3 year loan

   $20,000 new car, 4 year loan
    How much does a car really cost?
   Down payment, If you have it

   Fees = $40

   Title and Registration - 1.3% = $130 or
    $260

   Tax 7% = $700 or $1400

   Total cost without interest = $10,879 used
    or $21,718 new
How Much Does A Car Really Cost?
   Total Loan Costs with Interest

   Used - $336 X 36 months = $12,096.

   New - $520 x 48 months = $24,960.

   So that’s it? NOPE
                 Insurance
   Insurance protects you against potential
    financial loss.

   Types of car insurance:
    -- Liability required by state law
    -- Comprehensive required by loan
       institution
    Factors Affecting Car Insurance
                 Rates
   Your driving record and insurance history
   Your age or amount of driving experience
   Where you live
   Vehicle use (school, work, or pleasure)
   The kind of car
   Credit history
          Actual Cost of Insurance

   Depends - 22 year old with a clean record,
    driving a used car around 6 years old can
    expect to pay about $100 per month

   Now what’s the monthly cost of the car?
       $436.77
       $663.35


So That’s It? NOPE
           Maintenance Costs
   Oil changes
   Batteries
   Tires
   Inspections
   Gas
   Fluids
   Transmission
   Cleaning
              Repair Costs
   Brakes
   Water & Heater Hoses
   Tire replacement
   Fuses & Relays
   Electrical
   Engine repairs
   A/C
    How to avoid the High Cost of
                Cars
   Drive a beater until you can afford a
    better car
    Well,
Why Don’t I Just
 Lease a Car?
          Reasons not to Lease
   If you get in an accident and the vehicle is
    totaled, you’ll still be responsible to pay
    back the full lease contract amount - Buy
    “gap” insurance

   Going over allowed mileage 12,000-
    15,000 per year – You pay .12 to .25 per
    mile over
         Reasons not to Lease
   If you experience financial hardship and
    cannot afford the payment, you are legally
    responsible to pay the difference between
    what the dealer can get and the lease
    agreement.

   The car is NOT yours, yet they still make
    you pay for the maintenance of it.
          Reasons not to Lease
   You can’t claim the car as an asset. It
    belongs to the dealership

   You get in the habit of perpetual car
    payments. If you never paid a car
    payment and the average car payment in
    America was $350 a month, putting that
    $350 a month in a mutual fund that made
    10% would become $791,171 in 30 years.
         Reasons not to Lease
   If you decide to take the option to buy the
    car at the end of the lease term, you’ll
    have paid much more than the cost of the
    car even if you had financed it.

   You will pay for all cosmetic problems
    such as dings, scratches, stains, etc.

				
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posted:6/25/2012
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