Transportation

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FinanceFinance
Chapter 9Chapter 9

© EMC Publishing, LLC
Transportation Choices
Public Transportation
• Urban transportation
–Mass transit
–Commuter service

Public Transportation
• Between cities
–Amtrak
–Bus

Private Transportation
• Bicycle

• Motorcycle / scooter

• Car / truck

What do you think?
Discussion
© EMC Publishing, LLC© EMC Publishing, LLC
• What does it mean to go “green”?
• What public transportation options are
there in your community?
• What is the opportunity cost of public
transportation?
• Do you use public transportation? Why?

Buying a Car
• Narrow choice as to type of car
>

Buying a Car
–Luxury / sports

Buying a Car
–Luxury / sports
–SUV / pickup truck

Buying a Car
–Luxury / sports
–Full-size
• (not very popular;
gas guzzlers)

Buying a Car
–Luxury / sports
–Full-size
–Mid-size

Buying a Car
–Luxury / sports
–Full-size
–Mid-size
–Compact / mini

Buying a Car
–Luxury / sports
–Full-size
–Mid-size
–Compact / mini
–Hybrid (gas / electric)

Buying MY Car!
Price $6,500
Buying a Car
• Estimate cost to buy car
–Purchase price

Buying MY Car!
Price $6,500
Taxes (6%) $390
Buying a Car
–Purchase price
–Sales tax
(most states)

Buying MY Car!
Price $6,500
Taxes (6%) $390
License / Reg. $125
Buying a Car
–Purchase price
–Sales tax
–License / registration

Buying MY Car!
Price $6,500
Taxes (6%) $390
License / Reg. $125
Subtotal $7,015
Buying a Car
–Purchase price
–Sales tax
–Total borrowed

Buying MY Car!
Price $6,500
Taxes (6%) $390
License / Reg. $125
Subtotal $7,015
Finance (8.5%/3yrs) $596
Buying a Car
–Purchase price
–Sales tax
–Total borrowed
–Finance charge

Buying MY Car!
Price $6,500
Taxes (6%) $390
License / Reg. $125
Subtotal $7,015
Total $7,611
Buying a Car
–Purchase price
–Sales tax
–Total borrowed
–Finance charge
–Total loan

Buying MY Car!
Price $6,500
Taxes (6%) $390
License / Reg. $125
Subtotal $7,015
Total $7,972
Monthly pay. $211.42
Buying a Car
–Purchase price
–Sales tax
–Total borrowed
–Finance charge
–Total loan
–Monthly payment

Buying MY Car!
Buying a Car
• Estimate cost to maintain car
–Monthly payment

Buying MY Car!
Insurance $175.12
Buying a Car
–Monthly payment
–Insurance

Buying MY Car!
Insurance $175.12
Gas $175.00
Buying a Car
–Monthly payment
–Insurance
–Gas

Buying MY Car!
Insurance $175.12
Gas $175.00
Maintenance $25.00
Buying a Car
–Monthly payment
–Insurance
–Gas
–Maintenance
(oil, car wash, etc.)

Buying MY Car!
Insurance $175.12
Gas $175.00
Maintenance $25.00
Subtotal $586.54
Buying a Car
–Monthly payment
–Insurance
–Gas
–Maintenance
–Monthly subtotal

Buying MY Car!
Insurance $175.12
Gas $175.00
Maintenance $25.00
Subtotal $586.54
Emergencies $????
Buying a Car
–Monthly payment
–Insurance
–Gas
–Maintenance
–Monthly subtotal
– Emergencies
(car repairs, etc.)

Which of the following costs of
buying a car is not ongoing?
A. Purchase price
B. Insurance
C. Gas
D. Maintenance
E. License / registration

√
Buying a Used Car
• Shopping for a used car
–Blue Book
–Depreciation
–Warranty
• Used-Car Rule

Buying a Used Car
• Where to look
–Private owner (newspaper)
–New-car dealer
–Banks / finance (repo)
–Rental-car agency
–Used-car dealer
–Online

Buying a Used Car
• What to look for
–Exterior
–Interior
–Test drive
–VIN report
–Mechanic evaluation
–Clear title

Buying a New Car
• Warranty
–Extended
–“Lemon” laws

Buying a New Car
• Invoice / sticker price
–Never pay sticker
• Research pricing
online at
Edmunds.com
(http://fin.emcp.net/edmunds)
–Exception “ordering car”

Buying a New Car
• Trade-in
–NADA
(http://fin.emcp.net/nadaguides)
–Kelley Blue Book
(http://fin.emcp.net/kbb)
–Dealer will give
you less, but less hassle

Which of the following is not a
suggestion to consider when buying
a used car?
A. Conduct a VIN check.
B. Consult the NADA guide or Kelley Blue
Book for the car’s value.
C. Have a mechanic look at the car for you.
D. Look for a lemon of a car.
E. Don’t buy from private sellers.

What do you think?
Discussion
• Do you think it is better to trade your car in to
the dealer or to sell it on your own?
• What kinds of problems are there with selling
a used car on your own?
• Should you accept someone’s personal check
for your car? Why?
• What should you look for when buying a used
car?

Buying a New Car
• Financing a new car
–Loans (bank, credit union, finance company,
or dealer)
–Length of loan
–Cosigner

Leasing a New Car
• Advantages of lease
–New car
–Payments usually lower
–Service included (usually)
–Many dealers quit leasing (Chrysler 2008)

Leasing a New Car
• Disadvantages of lease
–Don’t own (no equity)
–Pay security deposit
–Limited mileage
–Insurance costs
–Always have car payment
–Can buy car at end of lease

Protecting Your Investment
• Maintenance
–Tire tread

• Maintenance
–Tire pressure

• Maintenance
–Belts

• Maintenance
–Hoses

• Maintenance
–Washer fluid

• Maintenance
–Coolant /
Anti-freeze

• Maintenance
–Brake fluid
–Power-steering fluid

• Maintenance
–Transmission Fluid
–Oil (change regularly
to extend life of car)

• Arranging for repairs
• Driving for economy
(http://fin.emcp.net/cartalk)

Which of the following is not an
important maintenance tip to prolong
the life of your car?
A. Check oil level often.
B. Check tire pressure often.
C. Check fluid levels often.
D. Check hoses.
E. Make sure radio volume is loud enough
for you; if not, add speakers.

What do you think?
Discussion
• Do you thinking leasing or buying is the
better option? Why?
• Do you check the oil, brake fluid, hoses,
and transmission fluid on your own car?
Why?
• How do you make sure your mechanic is
not “ripping you off”?

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