buying a car

Buying vs. Leasing

  • You pay in full for the car at time of purchase or make a down payment then sign for a Car Loan

  • Down Payment - an initial payment made when something is bought on credit

  • Car Loan - monthly payments to pay off remaining balance

    • Principle = the money you borrowed

    • Interest = the monthly charges on your loan

  • Car is 100% yours at the end of loan

 

Leasing a Car

  • You are basically renting a car for a short term (usually 36 months/3 years)

  • Monthly Payments - lower than a car loan

  • Lessee = YOU

  • Lessor = The dealership ("Owner")

  • At the end of the term (36 months/3 years):

    • Give the car back and move on

    • Renegotiate another lease on car (could be less since value of car has depreciated)

    • Trade-in car and start a new lease on a new car

 

New vs Used

New:

  • Instant Depreciation: depreciates about 15% the day you drive it off the car dealer's lot

  • ????

Used:

  • Lower price

  • Less depreciation

  • Lower insurance, taxes, and fees

  • Higher loan interest rate

  • Limited or no warranty

  • Higher maintenance

 

Where to Buy

Options:

  1. New Car Dealership

  2. Used Car Dealership

  3. Used Car Superstore

  4. "BHPH"

  5. Private Seller

 

New Car Dealership

  • Usually specified in a SPECIFIC manufacturer

  • New AND Used Cars

    • Certified Pre-Owned

      • Inspected and still under warranty - from the specific manufacturer of the dealer

    • Non-Certified Pre-Owned

      • Inspected but not as reconditioned due to being from a different manufacturer

 

Used Car Dealership

  • Used cars only from various manufacturers

  • Tend to offer their own warranties

  • Third party financing (bank or lender)

  • Larger overall selection of cars

  • Lower end used cars that were traded in at New Car Dealer

 

Used Car Superstore

  • HUGE inventory of all types

  • Financing through third party or own finance company

  • Usually offer good warranties

  • Often set prices - no haggling

 

"BHPH"

  • "Buy Here, Pay Here"

  • Small, independent car lots

  • MAY offer warrantied (very limited) and financing (higher interest rates)

    • Tend to pay in full at time of sale

  • Good for people with little to poor credit

  • Limited selection - less overall quality of vehicles

 

Private Seller

  • Buying DIRECTLY from current owner

  • No financing or warranty

  • Pay in full at time of sale

  • "As Is" - may let you get it checked

 

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The Monroney Sticker

 

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  1. Optional Equipment

    1. What you can add on (stereo, features, speakers, rims, etc.)

 

  1. Pricing Information

    1. Base price + Options + Fees

    2. Destination Charges - fee that the manufacturer charges to deliver a vehicle from the factory to the dealership

 

  1. Parts Content Information

    1. Where all the parts come from and how much of the car is from elsewhere

 

  1. MSRP Total Price

    1. Manufacturer's Suggested Retail Price - NEGOTIABLE!!!

 

  1. Fuel Economy

    1. Estimates on the car's fuel efficiency

    2. City (lower) and Highway (higher) MPG

 

  1. QR Code

    1. Additional information - lets you compare to other cars

 

  1. Safety Ratings

    1. National Highway Traffic Safety Administration (NHSTA)

      1. 5 Star Rating System (5 BEST, 1 BAD)

      2. Side Impact, Front Impact, Rear Impact

 

Miscellaneous Information:

*Things About Car Buying You Should Know

 

Kelley Blue Book

  • Value of car based on the Kelley Blue Book

  • Began in 1926

  • CA based vehicle valuation and research company

  • Factors age, mileage, model, accidents/condition, etc.

 

MSRP

  • Manufacturer's Suggested Retail Price

  • Suggested sale price of the vehicle

  • You can negotiate it-can get up to 5-10% below it

  • "Sticker Price"

 

APR

*Interest rate charged on the amount of the car loan you take on

 

Principle

*Refers to the full amount someone borrows from a lender or bank. For example, if you take out a $10,000 loan, the principle is $10,000.

 

Lien

*A legal right to possess another's property until a debt is repaid or an obligation is met

Legal claim against your used car/trade-in

 

Car Title

  • Legal proof of ownership of a vehicle

  • Blue/Purple document with car info and your info on it

  • Lines on back to sign and transfer ownership

 

VIN Number

  • Vehicle Identification Number

  • 17 characters long

    • Where:

      • Dashboard DRIVER's side

      • Inside the "Door Post" - where door closes

      • Stamped on floor panel of passenger side

      • Sometimes also on the engine/frame and ???

 

General Terms

Destination Fee: fee charged by manufacturer to send car to the dealer - passed on to you

Trade-in: car you

own that you want to sell to dealer and apply against the price of your new car

Gray Market Vehicle: foreign made car imported by an unauthorized dealer that may not meet American standards  

Out the Door Price: FINAL cost of the car… what you pay to drive it off as "yours"