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Essential Guide to Buying a Car: Key Terms and Considerations

Navigating the car buying process involves understanding key terms like APR, types of vehicles such as sedans, SUVs, and minivans, and insurance options including liability and collision coverage. Consider your needs—fuel efficiency, passenger capacity, and potential maintenance costs—as well as whether to buy new or used. Researching prices through resources like Kelley Blue Book is crucial. Know your budget, the importance of a 20% down payment, and how insurance costs may vary based on the vehicle's value. This guide helps you make informed choices.

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Essential Guide to Buying a Car: Key Terms and Considerations

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Presentation Transcript

  1. Lesson 5 Buying a Car

  2. Terms Review • APR • Coupe • Collision Insurance • Lease • Liability Insurance • Loan • Minivan • No-Fault Auto Insurance • Sedan • SUV (Sports Utility Vehicle)

  3. Which Car is Right for You? • Type of car: • Fuel efficient • Small • Able to carry a lot of passengers • Need to haul “stuff” • Cost • Can you afford monthly payment, insurance, gas, maintenance, etc.?

  4. New or Used? • New car • You are 1st owner • Warranties • Loses at least 30% of its resale value in 1st 2 years • Used car • Owned by one (or more) other owners • Cheaper than new car • Not sure how well maintained it is or how “hard” it’s been driven • May have been in accident (CarFax)

  5. What Can I Afford? • What features do you need? • Cost of insurance based on value of car • More features & more expensive car = more expensive insurance • Size/type of vehicle • Smaller cars more fuel efficient • Larger cars can carry more stuff and/or people

  6. Insurance • Cost based on value of vehicle and your driving • Liability • Collision • Comprehensive • Uninsured/underinsured motorist • “No Fault”

  7. Where to Find a Car • Car lots • New and/or used cars available • Pay more for used car than if bought directly from individual owner • Classified ads/Other • Purchase from individual owner • Research car before buying • Research quality • Consumer Reports, Car & Driver, Road & Track, etc. • Research Cost • Kelley Blue Book, Edmunds

  8. Own vs. Lease • Own • Can do with what you wish • Better stereo • Other customization • Car payment higher than lease • Lease • Pay someone else for the privilege of driving their car • You don’t own it • Car payment less than if purchased outright • May have to pay penalties if you exceed mileage limits in lease agreement

  9. If Buying Car: • Put down 20% as down payment • Protects loan from going “upside down” • Monthly payment lower • What do lenders look for? • Steady income • Established residence • Established employment • Credit history

  10. Operation & Maintenance • Oil changes • 3 months or 3,000 miles (some may be longer) • Tires • May need to replace • Buy based on driving needs, not “cool factor” • Repairs • Parts wear out and break • Replacement can be expensive • Budget for & save $200 - $500 per year for at least one medium-sized repair

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