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6.02 a -transportation_options
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6.02 a -transportation_options



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  • 2. 6.02 E SSENTIAL Q UESTIONS What are the options for meeting transportation needs? How can consumers make wise decisions when shopping for transportation needs?  Setting priorities  Doing the research  Leasing/purchasing vehicle  Obtaining insurance
  • 3. D ECISION M AKING T IME : S TEPS IN MEETING TRANSPORTATION NEEDS 1. Consider options for transportation needs 2. Set priorities 3. Do the research 4. Make decision 5. Implement 6. Evaluate
  • 4. S TEP 1. C ONSIDER OPTIONS FOR TRANSPORTATION NEEDSPublic transit  Which options are available in yourTaxicabs area?  Which options fitWalking, bicycling your personal needsMotorcycle, moped in short term or long term?Carpooling  Which options are within your budget?Purchase/Lease of a vehicle
  • 5. S TEP 1. C ONSIDER OPTIONS FOR TRANSPORTATION NEEDS Public transit  Widely available in cities, costs less than owning a vehicle, no responsibilities Taxicabs  Convenient, but very costly; may be difficult to find in some situations Walking, bicycling  Economical choice for short distances; less protection in foul weather
  • 6. S TEP 1. C ONSIDER TRANSPORTATION OPTIONS  Motorcycle, Moped  Convenient, less expensive to buy and operate, conserves energy, requires less parking area, easy to maneuver, high accident/injury rate, especially on major highways or in heavy traffic  Carpooling  Economical when convenient, saves energy, parking problems, reduces traffic, requires some rearrangement of personal schedule  Purchase/Lease of Vehicle  Convenient, costs more in energy, required parking, heavier traffic, maintenance costs, insurance expenses, property taxes, investment
  • 7. O UR A REA Since the community we live in has limited opportunities for public transportation, taxi services, & walking opportunities, we will primarily deal with leasing or purchasing a private passenger vehicle.
  • 8. VEHICLE PURCHASE / LEASE S TEP 2-S ET PRIORITIES Make a list of wants and needs for a vehicle Take into consideration:  Who will be driving the vehicle?  What you can afford?  When and where it will be used?  Whether to purchase an automobile, truck, motorcycle, or van
  • 9. S TEP 3. D O THE RESEARCHResearch Used vs. New vehicles Used vehicle---one-to-two-year-old (late model year) vehicle is often good option for first-time buyers because:  Initial cost fits budget needs  Depreciates (loses value) more slowly and costs less to insure  May have “Buyers Guide” sticker on window – check it out!  May still have factory/dealer warranty; Look for one-to-two-year- old vehicle ; others have no warranty
  • 10. S TEP 3. D O THE RESEARCH U SED C ARS How can I know it is a “good” used car? 1. Look out for defects-disclosure sheet- describes repairs/replacements done; if car has been in an accident- may need to have vehicle inspected by an independent technician 2. Ask about previous owner and maintenance records 3. Research performance, safety & service records for make & model on internet 4. Superstores, dealers and manufacturers sell “certified used cars”-have received thorough mechanical and appearance inspections, & necessary repairs and replacements 5. Check Official Used Car Guide and NADA Kelly Blue Book for info on used vehicles
  • 11. S TEP 3. D O THE RESEARCH Used vs. New vehicles New vehicle---the challenge is to find a vehicle to match one’s needs, wants, and budget Advantages of choosing new car….  Choice of features for safety, performance , economy, appearance & convenience  Choose between domestic and foreign made  Standard features at no extra charge  Extra features add significantly to cost  Custom vehicles can be ordered from factory
  • 12. S TEP 3. D O THE RESEARCH Where to buy Traditional dealership-represents one or two manufacturers, selling new and/or used  Have support of dealership Auto superstores sell new & used vehicles  Huge inventories of new and used vehicles Private sellers, classified ads, & auctions  sell “AS IS”  no warranty
  • 13. S TEP 3. D O THE RESEARCH Research makes and models What are important factors to consider? 1. Safety- brakes, airbags, head restraints 2. Reliability-check consumer magazines and Internet for quality and reliability marks 3. Fuel economy-type of fuel used and miles per gallon 4. Power & performance-acceleration, handling, braking, & acceleration 5. Comfort & convenience-headroom, legroom, & storage for cargo 6. Insurance-rates vary according to data tables on repair costs of various models 7. Warranties-generally provide for repair/replacement of defective parts during warranty period
  • 14. H OW TO COMPARE MPG http://www.fueleconomy.gov/feg/printguides.shtml  New Vehicles- vehicle specific information required by the EPA  Used Vehicles- general information on internet, but may not be the exact model with features, not required by EPAActual mileage will vary with options, driving conditions,driving habits, and vehicle condition
  • 15. S TEP 3. D O THE RESEARCH Research prices  Used vehicles---book value is the estimated value of a given make, model and model year  New vehicles---types of prices  *Invoice price-price the dealer pays the manufacturer  *Base price- the price of a vehicle with standard equipment  *Options and option package-features available at extra cost  *MSRP – (Manufacturers Suggested Retail Price)  base price +price options installed by manufacturer+  *Sticker price-dealer’s initial asking price as found on the sticker on the window
  • 16. S TEP 3. D O THE RESEARCH L EASING V S . P URCHASINGResearch options for Leasing: monthly payments in exchange for financing exclusive use of vehicle for a specified period of time; (like renting an apartment)  Lease term- length of contract, usually 24, 36 or 48 months  At End of Lease  Up front costs-made when signing lease-- -includes deposit, taxes, and registration  Disadvantage: No asset value in fees vehicle because you have only been renting  Residual value*-worth of vehicle end of lease; higher residual = lower payments  Written into contract:  Monthly lease payments-made by lessee-  Disadvantage: End-of-lease costs pays for vehicle depreciation during lease cover reduced value of vehicle, excess mileage, penalties for ending lease early, significant wear & tear  Interest- generally lower than when buying  Option to purchase at end of lease or to extend lease (usually at *residual value) video link: leasing basics video link- leasing benefits
  • 17. S TEP 3. D O THE RESEARCH L EASING V S . P URCHASING Purchasing---buyer pays cash or takes out a loan and pays for  Installment loans-regular – repay in the vehicle with monthly payments---costs more than paying monthly payments of approximately cash because includes interest on amount borrowed same $ until loan paid in full  Paying cash from savings  Secured at banks, credit unions, finance companies, savings & loans  Dealer financing---easy, on-the-spot source  Lender holds title until paid in full  Get separate quotes for car and for financing  Check financing terms at other sources  Variables affecting loan:  Check online for rates and terms  Length of time to repay (T)Time  Dealer holds title until paid (collateral)  Annual percentage rate (R)Rate  Amount of $ borrowed  Bank (Credit Union, Financial Institution) Financing (P) Principle  Get separate consumer loan for vehicle  Review Simple Interest Formula_  Pay back in installments  I=PRT  Either option may include trading in another vehicle for part of price
  • 18. O BTAIN AUTOMOBILE INSURANCEhttp://www.griffithfoundation.org/uploads/classroom.wmvThe basic concept of insurance Liability Insurance is Required by NC law Types of auto insurance available  Liability insurance covers driver’s responsibility toward other people (when at fault)  Bodily injury liability -covers others when other people are injured or killed  Property damage liability- covers when other people’s property of others is damaged  Collision-pays for loss/damages to insured person’s vehicle due to AT FAULT accident  Comprehensive physical damage- pays for losses due to fire, theft, vandalism, falling objects, hail, windstorm, flood, impact with wild animal  Medical payments- Pays insured’s medical expenses resulting from accident  Uninsured/Underinsured motorist- Protects against driver who causes accident, but does not carry insurance or has low limits of insurance coverage  Rental reimbursement- Costs of renting a car while yours is being repaired  Towing & Labor – Costs of labor & towing a vehicle broken down or wrecked
  • 19. V EHICLE I NSURANCE No-fault auto insurance pays claims  Which insurance coverage is required by regardless of who is at fault North Carolina law?  NOT AVAILABLE IN NORTH  Bodily injury Liability CAROLINA  Property damage Liability WHAT HAPPENS TO YOUR  What happens if you do not have this INSURANCE WHEN YOU FILE A insurance? CLAIM?  Surrender your license tag, pay fine, may  Review Previous slide for  or  impound vehicle  means points are NOT charged on  What if you are in an accident and the “at your insurance fault” party does not have this coverage?  means points apply to your insurance  Your Uninsured Motorist pays for your if there is claim on this coverage damages or injuries.
  • 20. B ODILY I NJURY L IABILITY C OVERAGELiability Insurance is  If you are AT FAULT and there are damages, you areRequired by NC law LIABLE to pay for the injuries you cause.  Both bodily injury liability & property damage liability charge points!  Bodily Injury Liability protects the insured person from liability claims for injury to:  People in other cars  Passengers riding with the insured person  DOES NOT cover the insured person (driver)
  • 21. P ROPERTY D AMAGE L IABILITY COVERAGE  Property Damage Liability protects the insured person from liability claims for damage toLiability Insurance is property of others, such as:Required by NC law  Personal property including vehicles, animals  Business property including telephone poles and other utility structures  Government property such as bridges, signs, and other road structures  Real property (land & permanent attachments)  Does NOT cover the insured person’s property
  • 22. O PTIONAL A UTO C OVERAGE - C OLLISIONUsually required by  If you are AT FAULT in an accident and your vehicle iscreditor if there is a loan damaged, file a collision claim.  Collision covers the cost of repair to insured’s vehicle!  Protects the vehicle owner against damage from a collision with another object or the vehicle turning over  Charges points to insurance  Points make premiums increase  Does NOT cover injuries to people
  • 23. O PTIONAL A UTO C OVERAGE - C OLLISION Although not required by financial responsibility law, collision is  Usually required by a lienholder if loan on vehicle is not paid in full A lienholder is a bank, individual or loan company who holds a secured interest in the property until the loan is paid in full. Example: If car catches fire and loan is still outstanding, the claim dollars are paid to insured and lienholder.
  • 24. C OMPREHENSIVE A UTO I NSURANCE  Protects the insured vehicle against damage from almost all damages except collisionUsually required bycreditor if there is a loan  Fire  Theft  Vandalism  Hail  Windstorm  Windshield damages  Collision with wild animal including fowls  Does NOT charge points when claim is filed
  • 25. U NINSURED /U NDERINSURED M OTORIST C OVERAGE Protects policyholder against drivers  Without insurance insurance to cover the loss suffered  Without enough insurance to cover the loss suffered Examples:  Hit and run drivers  Drivers who let insurance policy lapse and cause an accident  Drivers involved in serious accidents who carry low $ liability limits of coverage
  • 26. O THER A UTO C OVERAGE Medical payments - Covers anyone in vehicle or hurt by vehicle, even if not moving  Ex: Broken finger by closing finger in door or trunk, pedestrians Towing Expense - Pays tow fees Rental Reimbursement - Covers cost of rental when vehicle being repaired due to accident
  • 27. FACTORS IMPACTING VEHICLE I NSURANCE P REMIUM C OSTS $ limit on amount of coverage – the more you buy, the higher the premium Driver classification – experience, marital status of driver Driving record and habits---high-risk drivers premiums are higher State of residence Number of cars insured Cost of vehicle---higher rates for luxury/hot cars Whether young driver has completed a driver’s education course Amount of deductible for comprehensive & collision coverages--- amount insured pays before insurance company pays on claim
  • 28. A UTO C LAIMS The at fault driver of a vehicle that damages other property or injures other people is liable for the cost of repairs. In a one car accident…you are at fault!  Hitting a bridge, tree, ditch, etc. North Carolina financial responsibility laws mandate that drivers carry bodily injury and property liability insurance coverage.  Financially protects the NOT at fault party from someone causing an accident
  • 29. C OST OF I NSURANCE Insurance companies legally discriminate by using:  Relevant statistical data and  Risk factors related to the insurance type Underwriters at companies “rate” to determine the premium cost for the coverage requested.  Standard premiums may be rated up for hazards/risks  Points for tickets or accidents on auto insurance  Health issues on life/health insurance
  • 30. FACTORS A FFECTING C OST OF A UTO I NSURANCE Type of coverage $ Limit of coverage Risk retention -Deductible amount Experience rating – how long driver has been licensed (AGE IS NOT A FACTOR!!) At fault Accidents (Points) Tickets (Points) Type of Vehicle - Value, repairability, engine size, style, HOT Geographic area- Urban, suburban, rural Use of Vehicle - Distances driven and purpose pleasure only, <10 miles to work, >10 miles to work, business use Company
  • 31. video link: auto insurance basicsvideo link: tips on buying auto insurance
  • 32. W HAT IF YOU BUY A DEFECTIVE VEHICLE ? www.autopedia.com/#lemonlaw http://www.ncdoj.com/Consumer/Automobiles.aspx Class Activity