Start
Purchasing a NEW VEHICLE
What will you learn in this lesson? - Explain the advantages and disadvantages of purchasing a new vehicle - Explore financing options for purchasing a new vehicle
I can..
Think about a time when you bought something brand new, such as a smart phone, a gaming system, a pair of jeans. You might have had a reason for buying a new item rather than used. There are reasons a person might decide to buy something new instead of used. You should always consider the advantages and disadvantages of buying new rather than used. One of the biggest purchases that most people make is buying a vehicle. Considering whether or not to buy a new vehicle can be just as important as deciding what type of vehicle to buy.
Engage
~ Updated Features and Technology- new products will often include the latest and greatest technology. These new features can make owning the item more enjoyable. ~ Warranty- Many new items come with a warranty or guarantee. This means you are protected if there is a defect. You will not have unexpected expenses for repairs or replacements. ~ Customization- When you purchase a new item, you have the option to customize it. This could include picking the color, size, and configuration. You can have the exact item you want. ~ Condition- Buying new items ensures that you are the first user. Your new item will be free from wear and tear from use.
Advantages of Buying a New Item
~Warranty Coverage: a new car comes with a warranty that covers repairs and maintenance for a certain period or mileage limit ~Latest Features and Technology: new vehicles come equipped with the latest features and technology including advanced safety features ~ Customization Options: when you buy a new vehicle, you have the opportunity to customize it including the color, and optional features ~Lower Initial Maintenance Costs: new vehicles typically require less maintenance in the first years of owning it
Advantages of Buying a New Vehicle
~Depreciation: As soon as you drive off with your new car, it begins to lose value. The average new car will lose 20% of its value within the first year. ~Cost: A new car is much more expensive than a comparable used vehicle. ~Limied Availability: When you purchase a new car, it can take months for a custom vehicle. Buying a new car from a dealership, you are limited to what they have in stock ~Higher Insurance Premimums: A new vehicle comes with a higher insurance premimum. This is because a new car has a higher value than a used one. The cost of insuring a new vehicle can be significantly more expensive than insuring a used car.
Disadvantages of Buying a New Vehicle
How important is each of the following to you when purchasing a vehicle?
Step 3: Test Drive: During a test drive, you can experience how the vehicle drives and whether it is comfortable for you and meets your needs. It is a good idea to test drive multiple vehicles.
Step 2: Visit Dealerships: A dearlership is a business authorized to sell vehicles. A sales person will assist you in vehicles you are interested in and show you the options they have available to buy
Step 1: Research Different Vehicles: Take some time to research different models that meet your wants and needs such as size, gas mileage, safety, and technology options
Buying a new vehicle can be exciting but it is also a major financial decision.
Steps for Purchasing a New Vehicle
When purchasing a vehicle, you will need to consider the cost of the vehicle, upgrades, and other expenses. ~Manufacturer's Suggested Retail Price (MSRP): This is the price that the manufacturer recommends. It is not necessarily what the vehicle will cost ~Base Price: the cost without any additional features or options ~Vehicle Options: are features beyond the standard equipment. Examples: leather seats, navigation systems, bluetooth, sun roof, heated seats, cameras, etc ~Invoice Price: The price the dealership paid for the vehicle ~Sticker Price: The price the dealership is selling the vehicle for, including all options and additional fees
Vehicle Pricing and Purchase Cost
Even though the vehicle you have chosen has a sticker price listed, that does not mean that is the price you will pay for it. You will have the following as additional fees:
~Registration Fee: This fee will vary by state. In PA, it is $45. You have to pay the registration fee every year to continue driving. The first year is added to the purchase price. ~Vehicle Title: The legal document indicating who owns the vehicle. You will pay a vehicle title transfer fee to transfer ownership of the car from the dealership to you ~Sales Tax: A tax added to the price of the car
Fees Associated with Buying a Vehicle
Financing: You borrow money to pay for a vehicle over time Elements to Financing: Down Payment: The cash you pay upfront towards the cost of the car. Making a down payment, can lower the amount of your loan. You can also use your current car as a trade in and the dealership will take the amount your car is worth off your loan. Loan Term: The length of time you will have to make payments to pay off the vehicle Interest Rate: The amount you are paying for financing the vehicle. The interest rate will vary depending on your credit score, income, and other debts
Financing a Vehicle
Dealership Financing: Advantages: Convenience: you can handle the transaction in one place. Promotional offers: Dealerships often offer deals such as 0% interest Disadvantages: Higher Interst Rates: interest rates are usually higher than a bank Loan Terms: Less flexibility could lead to higher monthly payments Pressure to buy: pressure to make a quick decision
Bank Loan:Advantages: Interest Rates: A bank can provide a competitive interest rate depnding on your credit score Pre-Approval: A bank can pre-approve you for a loan before you visit the dealership. Loan Terms: A bank offers flexible loan terms which can help you pick a repayment period that meets your financial situation Disadvantages: Time Consuming: takes time to find a loan, visits to different banks Less Convinient: bank loans require more steps
Financing Options Bank Loan or Dealership
Deciding on Financing Tips