Purchasing a Car - Overview

Chapter 1

Opening Activity1. What is your dream car and why?2. What would a realistic car purchase for you and

why?3. What are some similarities and differences of the

two cars?

Take 5 minutes to type your answers. Be sure to submit on our class website.

We’ll then discuss some answers as a class.

A song to listen to as you answer the questions:

Billy Ocean - Get Out Of My Dreams, Get Into My Car

Opening Activity

Introduction Video which provides a great summary of this

topic

Buying a Car - Smarter About Money

Vocabulary Trade-In Value Selling Value New Car Used Car Buying Leasing Down Payment Kelly Blue Book Car Warranty Car Maintenance

Variable Costs Invariable Costs Buyer Incentives Buyer Discounts MSRP Principal Interest Rate Monthly Payment Credit Union Bank

Closing Activity1. Discuss makes of cars that you deem better than

others and explain your answer. Try to name 3 makes of cars that you both like best. (ex. We like Ford’s because…)

2. Now that you’ve named 3 makes of cars, do you hear any news reports about these? If so, explain how you’ve heard about them.

3. Think if your parent’s would’ve said the same thing about these makes of cars when they were your age. Explain whether you think they would have or would not have.

Work with a partner on this assignment. Take a piece of paper. Write both of your names on it. Then

write your answers & submit to me before leaving. Worth = 5 points

Opening Activity1. How familiar with the car buying process are

you?2. Have you and your parents had a talk on buying

a car? What have they said to you?3. Do you comfortable with the car buying process?

Take the beginning 5 minutes of class to type your responses. Be sure to submit them on our class website.

We’ll discuss some answers as a class.

A song to listen to as you answer the questions:

Bachman Turner Overdrive - Roll On Down the Highway

Opening Activity

10 Car Buying Tips1. Make sure you’re getting the right vehicle2. Assess the worth of your old car3. Decide whether new or used is best for you4. Consider whether leasing or buying makes sense5. Do your homework and set your target price6. Shop for money before you shop for a car7. Negotiate a lease8. Negotiate a purchase price9. If you hate haggling, consider using a car

shopping service10. Don’t let the deal-closer close out your savings

The Right Vehicle Most important factor: The car is appealing to you Determine the main purpose for your driving

o (i.e. commuting, hauling kids, weekends only, vacations) Gas mileage considerations Eco-Friendly considerations Consumer Safety Report (CSR) considerations.

The Right Vehicle

Closing Activity Next visit the following website:

www.newcars.com/carchooser

Instructions:1. This website will walk you through some of the

decision making processes involved with buying a car.

2. Print out 3 vehicles that interest you.3. On the back of the print out, explain why this car

is appealing to you.4. Submit to me before leaving class.

Worth = 20 points

Opening Activity1. How do you feel that buying a car will impact

your budget?2. What can you do to free up some extra money in

your budget for a car?3. How much do you think the volatility of gas

prices will effect you as a driver?

Take 5 minutes to type your answers. Be sure to submit on our class site.

We’ll discuss as a class some answers that you came up with.

A song to listen to as you answer the questions:Madonna - American Pie

What Can You Afford? You must maintain a monthly budget General Rule: 10%-15% of your monthly budget

should be spent on a car New cars come with warranties which last 3 years New cars increase your insurance cost

o Opt for a later model to help reduce insurance costs Check the record of the car to further reduce

insurance costs

New vs. UsedNew Car Factors:

The car has never been used The car can be equipped as you choose “Bells &

Whistles” You’ll receive the full factory warranty Your car is much more reliable Your car performs as it is supposed to You’ll temporarily enjoy the “new car” smell Lemon Laws protect buyers

New vs. UsedUsed Car Factors:

“Certified” used cars are being offered by dealers Verify the odometer of the car Pay money to have the car inspected by a

mechanic During the inspection, use the “touch &

comment” technique Important factor: Anything is negotiable, except

the right to inspecto Only if dealing with personal sellers, not car dealerships

New vs. UsedUsed Car Pointers:

Use National Auto Dealers’ Association Negotiate an acceptable price before you get the

car inspected Arrange for multiple test drives of the car The occurrence of multiple glitches should deter

you from purchasing It is still a used car. So expect to hear, “pings”,

“dings”, and “rattles”

New vs. Used

Closing Activity Pair up with a classmate.

1. What are your feelings about a new car vs. a used car?

2. Does your current financial situation and ability encourage to buy a used car? Why or why not?

3. Do societal demands play a factor in the purchasing of a new car? Why or Why not?

Take a piece of paper and write both member’s name. Then write you answers.

Submit to me before leaving class today. Worth = 10 points

Opening Activity1. When you decide on a car, is buying it your only

option? Why or why not?2. Why do car commercials offer the leasing price,

rather than the purchasing price?3. How do you think the current economic downturn

has effected the car purchasing industry and finances?

Take 5 minutes to type your answers & submit on our class site.

We’ll then discuss some answers as a class. A song for you as you answer the questions:

The Beach Boys - 409

Buy or Lease?Buying:

You take ownership of the car. It is now your asset.

You reserve the right to trade-in the car, or sell the car at any point in time that you desire.

The best opportunity to value when buying a car is to keep the car for an extended period of time after you’ve completed paying your auto loan.

Buy or Lease?Leasing Vocabulary:

Capitalized Cost = selling price Residual Value = the estimated worth of the car

at the end of the lease Money Factor = interest rate

Be aware that the language used in a leasing contract will vary from the language used in a buying contract!

Buy vs. LeaseLeasing:

The dealership maintains ownership of the car. The car is still an asset to the dealership

Leasing requires a down payment of 10%-20% Leasing comes with contractual restrictions Leasing costs more than buying In leasing a car, you’re paying the monthly

depreciation At the end of the lease, you must decide to

purchase or to trade-in for a different car to lease Choose leasing if you’re certain you don’t want

the car

Buy vs. LeaseLeasing Pointers:

Look for manufacturer-subsidized leases because they’re likely to be the cheapest

Visit leasewizard.com:o Identifies the best current leasing programso Includes standard residual value datao Provides options for changing lease terms & mileage limits

Set a target price & negotiateo Aim to pay about 2% above dealer’s listed priceo Dealers get incentives too. So their cost is often much

lower than listed, which gives you more room to negotiate on price

Buy vs. Lease

Closing Activity Independent work. Choose 3 cars that you’d like to buy. Locate the buying price and the leasing price for

each car. Answer these questions. Submit your answers &

prices to me before leaving today.

1. Are any of these cars more appealing as a result of the lease price? If so, explain which car and why. If not, explain why the leasing price isn’t an important factor for your decision.

2. Is leasing a viable option for you? Why or why not? Worth = 10 points

Opening Activity1. How do you plan to pay for the car you want to

buy?2. Is it a good idea to have a down payment? Why?3. Are there many banks that offer car financing?4. What options are available if the bank won’t lend

you money to buy the car?

Take 5 minutes to type the answers. Be sure to submit on our class site.

Here’s a familiar song to listen to:Rascal Flatts - Life Is A Highway

Money 101 It is best to get pre-approved for a loan, so you can

focus on negotiations of the price Pay attention to the length of the pre-approved loan Many manufacturers offer financing options Many manufacturers offer rebates to lower the price

of the car, rather than offering low interest rateso This could be an ideal situation if you’re struggling to get

financing on the higher price of the car Investigate many banks and their auto financing

prices Credit Unions offer loans typically 0.5%-1% lower

than traditional banking institutionso Credit Unions require membership, usually through

professional organizations

Money 101

Money 101 Independent In-Class Activity. Write down your answers and submit before you

leave. You’ll be given 10 minutes to do this assignment.

Look at 3 banks & 1 credit union.o Find information from these banks on their auto loan

rates & compare them.o Think about all of the factors involved with the rate. (i.e.

rate, length, membership requirements)o Find a variety or banks. (i.e. local chains, national

chains)

Worth = 10 points

Targeting a Price Visit edmunds.com & KBB.com:

o To determine the dealer’s costo Find information on customer or dealer rebateso Find information on subsidized lease dealso Find other special breaks that can reduce your cost

Dealer Incentives- rebates given to dealers on slower moving modelso If you know of these, you can reduce the price of the car

(generally in half) The latest models and most popular models offer

the least amount of room for negotiation Older models and less popular models offer the

most room for negotiation because dealers want these off their lots

Closing Activity Game Instructions:

o Go to www.fordcredit.com• Scroll over Finance Tools from the grey menu bar• In the drop-down list, select Understanding Credit• In the bottom right corner, select Fun and Games – Credit

Style• Then select the Featured Game

o The game is a Wheel of Fortune inspired game and it offers questions on credit.

You have the remainder of class to do this game. You may work with a partner if you want to.

Opening Activity1. Why is the negotiation period the most critical

for your success?2. What do you expect to encounter during the

negotiation process?3. In what ways can you better prepare for

negotiations?

Take 5 minutes to type your answers. Remember to submit them on our class site.

We’ll take 5 minutes as a class to discuss answers.

A song to listen to as you answer the questions:Sammy Hagar - I Can't Drive 55

Negotiating a Deal

Negotiating a Deal Start reasonably low on your price talks

o Don’t low-ball because you don’t want to appear as uninformed

Assemble all your research in a folder that you can bring to the table during negotiations

Once in the show room, quickly establish yourself as a buyer

The salesman will start to question you in efforts to pinpoint profit points for them. But maintain a focus on talking about price

Avoid lengthy talk on the MSRP. Show the salesman that you’ve done research to adjust his price point talk

Negotiating a Deal Have a concrete plan on your finances and car options. Do NOT hesitate because it shows uncertainty and the

salesman will pounce upon the opportunity for profit.o Make an offer and inform the salesman that you don’t intend

to wait long.o If time still passes, get up and walk around the show room or

lot to show your gravity in the situation.o Upon the salesman’s return, offer a comfortable price and tell

him to go renegotiate. As he is doing so, get up and continue to walk through the show room to demonstrate to the salesman that he’s letting a sale slip away because you’re losing interest.

Always look at multiple dealerships for offers. Agree upon a price, and then mention that you have a

trade-in. Then the trade-in isn’t already calculated into the reduced price.

MSRP vs. Invoice

Trade-In

Closing a Deal Listen to the dealer’s financing options – might be

better You’ll be offered an extended warranty

o Consumer Reports states that these aren’t worth the cost

o Buy only if your car has known dependability issueso Ask what the manufacturer’s warranty cover.o Ask when the extended starts and what if coverso Be aware that most extended warranties, only cover

power train issues. Most problems you’re likely to encounter following your warranty are electrical issues

You’ll be offered a security option which costs $1,100o They etch your VIN into the glass of your windows and

this supposedly makes your car less appealing to robbers

Closing Activity You have a homework assignment. Find time tonight to talk with your parents about

the car buying process. Get as much information from them as you can. Go through the whole process, as we did, and ask

questions at every step. Create a document in Microsoft Word. Then

submit it to me on our class website. This will be a completion grade only.

Worth = 20 points.

Purchasing a Car - Costs

Chapter 2

Opening Activity1. List costs for a car that remain the same

monthly.2. List costs for a cat that vary monthly.3. Do these costs make the car more or less

expensive than you originally thought? Why?

Take 5 minutes to type your answers. Remember to submit your answers on our class site.

We’ll take discuss answers you came up with as a class.

A song to listen to as you answer the question:The Playmates - Beep Beep

The Real Cost Video

VocabularyBBB

WarrantyAs-Is Warranty

Implied WarrantyDealer Warranty

Manufacturer WarrantyDepreciation

Fixed ExpensesFlexible Expenses

Budgeting

In-Class Activity The Operating Costs of a Motor Vehicle

o Activity 9-1

Model Year: 2012 Make, Size, Model: Ford Focus SEL Sedan

We’ll do this activity as a class.

Part 2: you’ll be given 15 minutes to do. Submit this to me by the end of class.

Opening Activity What happens if sign documents for an extended

warranty, but then you change your mind and decide against having the extended warranty?

What options do you have if you feel as though the dealership lied to you in order to get you to buy the car?

Take 5 minutes to answer the questions. Be sure to submit the answers on our class site. Feel free use “Google.”

We’ll then discuss the answers as a class.

Here’s a song to listen to:Prince - Little Red Corvette

Car Warranty Video

In-Class Activity Warranties and Service Contracts

o Activity 9-2

Work with a partner. Be sure to have both names on it before turning it in

You’ll have 15 minutes of class time to complete the assignment

Use the copy of the Ford Focus Warranty to answer the questions

The warranty is on the class site titled: Ford Warranty

Worth = 20 points

Closing Activities Go to www.ford.com At the bottom of the screen under Ownership,

select Warranty & Service Plans Create a table in Microsoft Word that compares

every warranty option offered by Ford

You’ll be given the remainder of the class period to complete this activity

You may work with a partner. Be sure to include both names on the table print-out

Worth = 20 points

Opening Activity Why do the banks charge you interest for a loan

they gave to you? Is the interest you get charged effected by your

credit score? Why? What can you do to establish a credit history?

Take 5 minutes to answer. Be sure to submit answers on our class site. Feel free to use “Google.”

We’ll then discuss as a class the answers.

Here’s a song to listen to: Johnny Cash - I've Been Everywhere

Math Review Interest Formula:

o I = PRTo I = Interesto P = Principalo R = Rate (annual rate as decimal; 5% is 0.05%)o T = Time (as years)

Read over the page on this link for review:Simple Interest Online Calculatoro Also, we’ll be using the calculator for some of the

problems in class

In-Class Activity How much would you spend?

o Activity 9-5 (a-d)

You’ll be given the remainder of the class to finish.

You may work with a partner on this activity. Make sure both names are on it prior to turning in.

The final 10 minutes of class, I’ll go over the correct answers.

Worth = 20 points.

Opening Activity Follow the link to the site and read the article:

2012 Honda Civic

In Word, type a response to the article:o Summary of what the article stated.o What you like about the car?o What you dislike about the car?o Would you buy the car?

Be sure to submit your answers on our class site. Here’s a song to listen to as you answer the

questions:John Travolta - Greased Lightning

In-Class Activity How much would you spend?

o Activity 9-5 (e-h)

You may work with a partner. Include both names on paper.

You’ll be given 20 minutes to complete this activity. You’ll submit to me for grading. We’ll spend 10 minutes going over correct answers.

Worth = 20 points.

Purchasing a Car – Auto Insurance

Chapter 3

Opening Activity1. What is Automobile Insurance?2. Do I need to have it and why?3. What kinds of items can be damaged in an accident?

Take 5 minutes to type your answers. Be sure to submit on our class website.

We’ll then discuss some answers as a class.

A song to listen to as you answer the questions: Accidental Tourist

Overview of Automobile Insurance

What is Automobile Insuranceo Vehicle insurance (also known as auto insurance, car

insurance, or motor insurance) is insurance purchased for cars, trucks, and other road vehicles. Its primary use is to provide protection against physical damage and/or bodily injury resulting from traffic collisions and against liability.

What types of coverage's are available?o Complete Types of Coverage Worksheeto Use internet sites:

http://www.carinsurance.com/CoverageDefinitions.aspx Why do I need insurance

o http://www.youtube.com/watch?v=WscNJCMHGho

Closing Activity1. Develop your own Auto Insurance Plan.2. Decide which coverages you will carry from

those reviewed in this lesson3. Write a sentence of why you would choose the

coverage and how much money your coverage would cover.

Work with a partner on this assignment. Take a piece of paper. Write both of your names on it.

Then write your answers & submit to me before leaving.

Worth = 5 points

Opening Activity1. Is Automobile Insurance required by Law in PA?2. Does PA have requirements on the kind of insurance

or company you deal with?3. Where can I find information on PA Auto Insurance?

Take 5 minutes to type your answers. Be sure to submit on our class website.

We’ll then discuss some answers as a class.

A song to listen to as you answer the questions: California Dreamin

PA Laws and Requirements

In Pennsylvania, you must at least have the following liability insurance protection in order to legally drive a registered automobile:

o $15,000 of coverage for an injury or death to one person in a single accident.

o $30,000 of coverage for injuries or deaths to more than one person in a single accident.

o $5000 of property damage insurance.

Of course, these are just the minimum standards. Insurance experts suggest drivers carry much more protection than what’s required by PennDOT.

In the commonwealth, all drivers must carry proof of insurance at all times. Causing an accident can be financially devastating, due to the direct

expenses involved, as well as potential lawsuits. To safeguard yourself from these risks, it’s best to have as much liability insurance as you can afford.

Closing Activity1. Access the PennDot web site:

http://www.dot.state.pa.us/2. Navigate to Rules and Regulations:

http://www.dmv.state.pa.us/vehicle_code/index.shtmlhttp://www.autoinsurancetips.com/pennsylvania-auto-insurance-laws-minimums-requirements

Write a paragraph on why you think these regulations exist in PA and if you think they are fair or not.

Take a piece of paper. Write both of your names on it. Then write your answers & submit to me before leaving.

Worth = 5 points

Opening Activity1. What will happen if you drive a car without automobile

insurance?2. Do I need to have proof of insurance in my car at all times?3. Can I be sued by another driver if I do not have coverage

and am involved in an accident?

Take 5 minutes to type your answers. Be sure to submit on our class website.

We’ll then discuss some answers as a class.

A song to listen to as you answer the questions: I Fought The Law

Importance of Auto Insurance

Penalties for Failure to Maintain Financial Responsibility What happens if you have no proof of insurance? That depends on the action

you take. If you immediately turn in your plates to PennDOT, you won't face any

penalties, aside from not being able to drive. The same is true if your insurance lapse was less than 31 days, and you can provide proof you didn't operate your vehicle during this time.

Otherwise, you may face a:o $300 or more fine for driving without insurance.o Three-month registration and driver's license suspension.o $50 registration reinstatement fee.o $50 driver's license reinstatement fee.

You'll receive a letter from PennDOT if your driving privileges are suspended. Just follow the guidelines in the letter to go about the task of reinstating your license and registration.

Keep in mind that no one can drive your vehicle during its registration suspension.

You are personally liable for any damages if you are involved in an accident and do not have insurance.

Closing Activity1. Access the PennDot web site:

http://www.dmv.state.pa.us/centers/SuspensionCenter.shtml

2. Write all the steps needed to restore your driving privileges after a suspension including all the costs.

Take a piece of paper. Write both of your names on it. Then write your answers & submit to me before leaving.

Worth = 5 points

Opening Activity1. What factors are involved in determining the cost of

automobile insurance?2. Is the cost for teenagers higher or lower than others?3. How can I get a quote and purchase insurance?

Take 5 minutes to type your answers. Be sure to submit on our class website.

We’ll then discuss some answers as a class.

A song to listen to as you answer the questions:Born To Be Wild

Cost of Auto Insurance Here are a few of the other factors taken into account:

o Your age o Marital Status o Gender o Accident claims o Geography o Driving violations o Your vehicle o Credit rating o Occupation o Years of driving experience o Miles driven per year o Distance to work o Business use of the vehicle

How Car Insurance Works:o http://auto.howstuffworks.com/buying-selling/car-insurance3.htm

Cost of Auto Insurance WHY ARE YOUNG DRIVER RATES SO HIGH? Percent of drivers involved in an auto

o Age Group accidents each yearo 16-24 25%o 25-34 19%o 35-44 19%o 45-54 17%o 55-64 11%o 65-74 5%o 75+ 4%

Cost of Auto Insurance Where can I purchase Automobile Insurance Websites: http://www.dmv.org/pa-pennsylvania/car-insuranc

e.php Companies:

o Allstate o Travelers o Geico o Liberty Mutual o Esurance o Progressive o State Farm o Erie

Closing Activity1. Access http://www.dmv.org/pa-pennsylvania/car-insurance.php

2. Create a Microsoft Excel spreadsheet that included the quotes of at least 4 different companies. Use these facts:Car: 2000 Toyota Camry LE 4 CylAge: 18 year old, Gender: Use your genderCoverage: Use PA State MinimumAssumptions: Your first car, no insurance before, commute to school within 5 miles, no prior auto infractions

You’ll be given the remainder of the class period to complete this activity

You may work with a partner. Be sure to include both names on the table print-out

Worth = 20 points

Opening Activity1. What should I do if I am involved in an accident?2. Will my auto Insurance go up if I am involved in an

accident?3. Will my Auto Insurance cover all damages from an

accident?

Take 5 minutes to type your answers. Be sure to submit on our class website.

We’ll then discuss some answers as a class.

A song to listen to as you answer the questions:Good Vibrations

What to do about an accident?

If you should be involved in an accident, there are a few things you should always do

(If you are seriously injured, someone else should do these for you). Whether or not you are one of the drivers, these tips will help you avoid problems later.

See that all injured persons receive medical attention immediately. Notify the police. This is not required in all situations, but a police report can

become an important record on what happened. Get from the other driver his or her name, address, telephone number, vehicle

license number, insurance company, and insurance policy number. Get the names, addresses and telephone numbers of passengers and other

witnesses to the accident. Make notes about what happened, weather conditions, time of day, etc., -- all the

“little things’ that you may have to remember later. It is best not to discuss the specifics of your insurance policy other than the

name of your insurance company and your policy number.) Notify your insurance agent or company as soon as possible. He or she will help

you with the filing of the claim with the company.

http://articles.moneycentral.msn.com/Insurance/InsureYourCar/WhatToDoAfterACarAccident.aspx

Closing Activity1. Complete the Auto Insurance Worksheet

You’ll be given the remainder of the class period to complete this activity

You may work with a partner. Be sure to include both names on the table print-out

Worth = 25 points (5 points per question)

Purchasing a Car – Unit ProjectMy Car: A Personalized Plan

Chapter 1

Unit Project1. Unit Project – My Car: A Personalized Plan 2. Scoring rubric Attached3. Questions?

You’ll be given three class periods to complete this Project

Each student will present a PowerPoint presentation to the class.

Worth = 100 points

Works Cited Money101: Buying a Car. Cable News Network,

2011. Web. 24 April 2011. http://money.cnn.com/magazines/moneymag/money101/lesson17/

Youtube.com. YouTube, LLC, 2011. Web. 24 April 2011.

Simple Interest. Ruth Technology, 2011. Web. 24 April 2011. http://www.powerofinterest.com/free/mortgage_calculators/simple_interest.htm

Works Cited Newcars.com. Cars.com, 2011. Web. 24 April

2011.

Ford.com. Ford Motor Company, 2011. Web. 24 April 2011.

Will the 2012 Honda Civic Be Honda’s Much-needed Hit? Autotropolis, Inc. 2011. Web. 24 April 2011. http://www.autotropolis.com/krome-on-cars/will-the-2012-honda-civic-be-hondas-much-needed-hit.html