guide to buy a car

HOW TO BUY A CAR Money Matters for Teens Workbook by Larry Burkett This is probably the first big purchase you will make. Deciding on car model, color, accessories—the more specific the more expensive! Research    Library or Consumer Reports Car Buying Guide - Give price guidelines and reliability Auto magazines (danger of falling in love with the looks rather than the function) Sites: http://autotrader.com/ http://www.edmunds.com/ Edmunds http://www.caranddriver.com/ http://cartalk.com/ http://www.carmax.com/ http://www.slc-classifieds.com/automotive/index.asp http://www.carsoup.com/ http://www.kbb.com// Kelly Blue Book Begin Test Drives/Sits: All cars do not fit all people! Decide New or Used:     Advantages of New: New car look, smell, full warranty, dealer incentives, lemon laws Disadvantages: Lose $2000 driving off the lot, more expensive Advantages of Used: Much lower price, may still be under warranty Disadvantages: Maintenance history, been in accident, no lemon protection in Utah, worn-down condition, tires need replacing? Must get checked out by trusted mechanic. How to price? How much will it cost?  New or used: Research price at kbb.com or edmunds.com  Check comparable values at carsoup.com, autotrader or cars.com  Even new cars will vary with each dealer, locality, incentives  Used cars generally don’t even have a sticker price posted  A used car from dealer may have a dealer warranty, definitely will have a dealer markup  Check http://www.carfax.com/ for damage and accident history 1 Cost Equals: Initial purchase price + sales tax (even if bought out of state)+ registration Insurance: (>$100/month) State requires medical and liability Collision is optional, unless required by auto loan (collision repairs your car if damaged Deductibles = the amount you pay out of pocket before insurance pays (Ranges from $0 to over $1000) The higher the deductible the less the monthly premium. Auto loans normally require no greater than $500 deductible. Maintenance: Gas & oil (weekly $20) + parking pass + tires (every 3 years>$150) Questions to Ask Individual Seller:             How long have you owned the car? Why are you selling it? What repairs has it had and when? What equipment has been replaced? Has it been in an accident? Has it ever been broken into? Does it leak oil or other fluids? What gas mileage does it get? When was the last tune-up? When were the tires last replaced? Who does the maintenance? Is the car paid off? Who has the title? Visual Inspection:         Look for consistent, even paint (2-tone means it was repainted due to an accident) Raise hood--how clean is the engine? Any sign of leakage? (look on ground under car for leaks) Look at screws attaching hood. (If paint is broken, the hood was removed for repair or repainting) Push down on each corner of car and release. Car should bounce only once; other- wise, shocks may need replacing ($150 each) Look at tires for even wear. (new set=$150-300) Uneven wear could require alignment or more serious frame damage Check general interior, exterior condition. Smell interior (smoker?) Does car start immediately? Check that all accessories work: heater, a/c, radio, defrosters, electric windows, locks, seats, etc. 2  Check that current registration is in owner’s name--don’t buy if they don’t hold title. Test Drive:     Test all driving conditions from freeway to suburban--parking, acceleration, hard braking with no pulsing or pull to either side. In parking lot, do a 360-degree turn with steering locked in each direction. No noise or jerking of wheel. Have a friend follow in a separate car, looking to see the car track straight ahead. No blue smoke during acceleration. If Serious About A Car: Get permission to take the car to a trusted mechanic for a once-over. If the seller’s answers don’t agree with what you find…DON’T BUY!!! WHAT ELSE HAS HE LIED ABOUT??? If Everything Checks Out:    Make an offer based on price research you did. Ensure your quote matches exactly the options and mileage of the car. Be prepared to walk if they don’t accept. Falling in love with one car is very expensive and it won’t last. If Accepted:    Give deposit and get receipt. Arrange to meet to transfer title and check in a public place. Don’t use cash--danger of being robbed. If title held by a bank, do the transfer at the bank to ensure vehicle is paid off and you receive the title directly. How Will You Pay for the Car?     Pay cash (danger of being robbed- no receipt, paper trail) Write check Get auto loan (cost increase due to interest) Use credit card 3 True Cost of $10,000, used 2000 Honda Civic: Cash Cost: $10,000 price + $675 (6.75% sales tax) + $175 (registration & plates) $500 (6 months insurance) + $60 (1 month gas) + $30 school parking pass = Total $11,440.00 Check Cost: Same total = $11,440.00 Auto Loan: All cash costs + interest on loan (3 yrs @ 6.74% = $307.58/month) $11,440.00 + $1,072.88 = $12,512.88 If interest rate was 10% = $13,056.12 Credit Card: All cash costs + interest on credit card (36 mos @ 13.71%= $340.37) $11,440.00 + $2,253.32 = $13,693.32 Danger --If you pay the minimum amount, you may never pay off loan!! If paying the minimum $100 per month, after 30 years you will have paid $36,000 and will not have paid off loan. Total Cost >$38,000 4