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  • 1. Vehicle FinanceUnit 4
  • 2. Choosing A VehicleBuying a vehicle is a majorpurchase. The initial cost,the registration andinsurance, the fuel, themaintenance costs, arejust a few things toconsider when decidinghow much you can affordto spend.
  • 3. What is important in a vehicle?In small groups,comprise a list of whatyour groups deemsimportant in a vehicle.For example; safetyfeatures, options, resalevalue, fuel economy,etc.
  • 4. Buying A New VehicleWhen purchasing anew vehicle it isimportant to know andunderstand all of thecharges. The chargesinclude; base price,options, freightcharges, and anumber of taxes.
  • 5. Shop AroundThe sticker price is the full price of the vehiclewith the available options included. This priceshould be the same at all dealers. However,SHOP AROUND! The actual selling price willmost likely vary from dealer to dealer.base price, documentation fee, freight charge,optional equipment, preferred equipmentpackage, sticker price, trade-in allowance, airtax, tire tax
  • 6. Unit 3 – Owning & Operating A Vehicle 3-1 Describe the methods of acquiring a 30S Consumer Mathematics vehicle.Unit 3 – Owning & Operating A Vehicle
  • 7. Group Discussion – Buying A New Car ADVANTAGES DISADVANTAGES
  • 8. Example Problem #1Find the sticker price for the following 2 doormustang. The base price is $25 880 and it hasthe following optional equipment:  A preferred equipment package costing $1 260  A four speed automatic transmission costing $995  An AM/FM stereo with CD player costing $200  Air Tax of $100  Freight of $620 Sticker Price $29 055
  • 9. Example Problem #2 Dez, from Brandon, is going to buy a Camaro Z28 sport coupe with a base price of $20 798. He adds a package costing $1 585 plus an automatic transmission for $695. Freight costs $655. He is getting $5000 trade-in allowance on his old car. There is a documentation fee of $150. What is the total price he will pay? Total Price $21 148.96
  • 10. Textbook Assignment Page 163 - 164 Questions 1-7
  • 11. Buying A Used VehicleSince a new vehicledepreciates so muchin the first year, manypeople look to buy aused vehicle. It isimportant to shoparound when doing so.
  • 12. Shop AroundIf a used vehicle is bought from a dealer youmust pay GST and PST on the price of thevehicle. If it is bought privately (in Manitoba),you only have to pay PST. Before youpurchase a used vehicle make certain thereare no liens against the vehicle. A lien searchcan be done for about $26. When youpurchase a used vehicle make sure you havea written contract.
  • 13. Group Discussion – Buying A Used Car If you were buying a used car, what things would you check or look for?
  • 14. Group Discussion – Buying A Used Car ADVANTAGES DISADVANTAGES
  • 15. Example Problem #1 Les goes to a reputable dealer in Killarney, MB to buy his car. The sticker price for this used car is $5500. How much will it cost him? Total Cost $6270
  • 16. Example Problem #2Gordon lives in Victoria, BC. He wants to buy aused car privately for #1995. Gordie does a liensearch for $26 and asks a mechanic to do adiagnostic test for $30. The mechanic tells himthat the car needs some engine work that will cost$650, including labor. The book value of the caris $2500. He also needs to get a safety done onthe vehicle before he can register it. How muchwill this car cost Gordie? Total Price $3029.90
  • 17. Textbook Assignment Page 175 - 176 Questions 1 - 10
  • 18. Calculating Car Payments The most economical way to purchase a vehicle is paying upfront without a loan since you can avoid interest. This is often not possible since most people do not have access to that kind of cash.
  • 19. Calculating Car Payments Most people need a loan to pay for a vehicle. An important consideration when obtaining a loan to buy a vehicle is the size of the monthly payment, and your ability to make this payment.
  • 20. Calculating Car PaymentsExample 1: Using a SpreadsheetUse the Vehicle Payment Calculatorspreadsheet to determine the monthlyloan payment for a used car valued at$8250.00, plus taxes, with an interestrate of 8.9% compounded monthly.The loan is repaid in two years (24monthly payments). Also determinethe total cost of the loan, and theamount of interest paid.
  • 21. Calculating Car PaymentsExample 2: Using an OnlineCalculatorNow lets look at the same vehiclecosts and use an online auto loancalculator to determine the monthlypayment for an $8250.00 used carloan with an interest rate of 8.9%compounded monthly. The loan isrepaid in two years (24 monthlypayments). Also determine the totalcost of the loan, and the amount ofinterest paid.http://www.onlineloancalculator.org/
  • 22. Practice• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.• Lorem ipsum dolor sit amet, consectetuer New or Used Vehicles adipiscing elit. Vivamus et magna. Fusce Worksheet #1 sed sem sed magna suscipit egestas.
  • 23. Leasing A Vehicle
  • 24. Leasing A VehicleWhen you lease a vehicle,you are essentially rentingthe vehicle from the leaser.You, the lessee, mustmake monthly payments topay for the depreciation ofthe vehicle, the sales taxeson the amount ofdepreciation and theinterest on the unpaid valueof the car.
  • 25. Leasing A VehicleAt the end of the lease, youwill either return the vehicleto the leaser or buy it for theresidual value. The residualvalue is an estimate of thevehicles worth at the end ofthe lease as determined bythe leaser at the beginning ofthe lease.
  • 26. The Lease AgreementWhen you lease a vehicle, youpay a monthly leasing fee for aspecified number of months. Atthe end of the specified timeperiod, you can either purchasethe vehicle or return it to thedealer. If you decide to purchasethe vehicle you will purchase it forthe residual value. This value isgiven to you when you lease thevehicle.
  • 27. The Lease AgreementWhen you lease a vehicle, you will berequired to sign a lease agreement.This agreement specifies:•the initial value of the item•the buy out price at the end of thelease (which is the same as theresidual value)•the down payment (if there is one)•any additional fees•the interest rate•the monthly payment and date due.
  • 28. The Lease AgreementThe lease agreement will alsospecify other terms orrestrictions, such as what isreasonable use and care of thevehicle. A vehicle lease willusually specify how manykilometres you may drive, andthe cost per kilometre if youexceed this limit.
  • 29. Group Discussion Leasing A VehicleADVANTAGES DISADVANTAGES
  • 30. Leasing There is some key terminology one should know with regards to leasing. • Lease term • Lease Payment • Residual Value • Residual Value Rate • Security Deposit • Down Payment
  • 31. Example Problem #1John leases a vehicle that is worth $34 000 plus taxes inNanaimo BC. The monthly lease payment is $349 plustaxes for a term of 36 months. A down payment of $3850is required. As well, a $500 refundable security deposit isrequired when the lease is signed. The residual value rateis 75% after three years. a) Calculate the total monthly lease payment including taxes b) Calculate the total lease payment. c) Calculate the amount which must be paid at the start of the lease. a) $399.61 d) Calculate the residual value of d the vehicle $18 235.96 b) after 3 years. c) $4 749.61 d) $29 197.50
  • 32. Lease Calculator
  • 33. Practice• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.• Lorem ipsum dolor sit amet, consectetuer Page 187 - 188 adipiscing elit. Vivamus et magna. Fusce sed sem sed Questions egestas. magna suscipit 1-7
  • 34. Practice• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.• Lorem ipsum dolor sit amet, consectetuer Leasing adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas. Worksheet #2
  • 35. Practice• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.
  • 36. Vehicle Maintenance & Insurance Costs Once you have purchased or leased a vehicle, there are several costs involved in operating and maintaining it. Some of the costs of operating a vehicle are fuel consumption, maintenance, repairs, depreciation, and insurance.
  • 37. Fuel EconomyAfter you have purchased orleased a vehicle, there are costsinvolved in operating it. One ofthese costs is fuel. Differentvehicles require differentamounts of gasoline to drive thesame distance. The number oflitres of gasoline required totravel 100 kilometres is knownas the vehicles fuel economyor consumption.
  • 38. Fuel Economy The fuel economy of your vehicle will vary, depending on when and how you drive. The types of optional equipment that you have installed and the size and condition of the vehicle will also affect the fuel economy. Manufacturers are required to place a fuel economy label on new vehicles. Generally, they will indicate the city and highway fuel economy for that particular model.
  • 39. Fuel Economy The formula for determining the fuel economy of a vehicle is: You may hear "miles per gallon" as a reference to fuel ecomony but for this course we will be expressing fuel economy in L/100 km.
  • 40. Fuel Economy Example 1: At 60 km per hour, a sedan uses 18.4L of gasoline to drive 225 km. At 100 km per hour, the same sedan uses 22.1L of gasoline to drive the same distance. • Find the fuel economy of the sedan at 60 km per hour. • Find the fuel economy of the sedan at 100 km per hour. • What does this example suggest about the relationship between the fuel economy of a vehicle and the speed driven?
  • 41. Fuel Economy Example 2: The Ford family is planning a driving vacation of a distance of 5000 km. The family has two vehicles, a sedan and an SUV. The fuel consumption for the sedan is 8.8L/100km and for the SUV is 12.7L/100km. The family estimates that the cost of gasoline during their vacation will be $1.11 per litre. •Calculate the cost of gasoline required by the sedan. •Calculate the cost of gasoline required by the SUV. •Which vehicle is less expensive to drive on the vacation and by how much? •What other factors might the Ford family consider when deciding which vehicle to take on their vacation?
  • 42. Fuel Economy – Research ActivityUsing the internet, research5 different vehicles,recording their fueleconomy in litres per 100km. Calculate the # of litresrequired to travel 24 000 kmin one year. Calculate thecost of fuel, using todaysprice of 118.9 cents perlitre.
  • 43. Practice• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.• Lorem ipsum dolor sit amet, consectetuer Essential of Mathematics 11 adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas. Q 1-10 Page 146-147
  • 44. Vehicle Maintenance and Repairs The key to a long lasting vehicle is regular maintenance. It is a good idea to create a vehicle maintenance schedule and stick to it. Here are vehicle maintenance tips that may help: •Monthly checks for tire inflation and condition, operation of lights, and fluid levels. •Check the transmission fluid, battery and cables, belts, engine air filter, oil and filter, exhaust, fuel filter, power steering fluid and hoses every 3-6 months. •Ensure that you follow the suggested kilometre schedule for oil changes. •Do 6 month checks on chassis lubrication, polish and wiper blades. •Do 12 month checks on brakes, cabin air filter, coolant, spark plugs and steering and suspension.
  • 45. Vehicle Maintenance and Repairs The key to a long lasting vehicle is regular maintenance. It is a good idea to create a vehicle maintenance schedule and stick to it. Here are vehicle maintenance tips that may help: •Monthly checks for tire inflation and condition, operation of lights, and fluid levels. •Check the transmission fluid, battery and cables, belts, engine air filter, oil and filter, exhaust, fuel filter, power steering fluid and hoses every 3-6 months. •Ensure that you follow the suggested kilometre schedule for oil changes. •Do 6 month checks on chassis lubrication, polish and wiper blades. •Do 12 month checks on brakes, cabin air filter, coolant, spark plugs and steering and suspension.
  • 46. Vehicle Maintenance and Repairs Example 1: Sam takes his car in for regular service and the technician discovers the radiator hose needs to be replaced. The servicing of the vehicle requires three litres of oil at $5.66 per litre, an oil filter for $11.99, and half litre of washer fluid worth $2.25 a litre. The radiator hoses costs $12.95 and the antifreeze then needs to be topped up at a cost of $1.99 per litre. The vehicle will require 4 litres of antifreeze. the total time required to service vehicle is 1 hour 15 minutes. The rate the service station charges for labour is $80 per hour. PST and GST are charged on parts and labour. Find the total cost of servicing and repairing the vehicle.
  • 47. Practice• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.• Lorem ipsum dolor sit amet, consectetuer Essential of Mathematics 11 adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas. Q 1-5 Page 152-153
  • 48. Vehicle Depreciation All vehicles lose value as they age. This is called depreciation. There are various methods for calculating depreciation and all vehicles will depreciate at different rates. Often the rate of depreciation will be more in the first year than in later years, but for the purposes of this course we will assume that the depreciation rate remains the same.
  • 49. Vehicle Depreciation Example 1: The sale price of a vehicle is $38,500. The rate of depreciation is 20% each year. The term of the lease is 36 months; the residual value of the vehicle will be 55% of the sale price. •Calculate the value of the vehicle and the amount of depreciation at the end of the first year. •Calculate the value of the vehicle and the amount of depreciation at the end of the second year. •Calculate the value of the vehicle and the amount of depreciation at the end of the third year. •Calculate the residual value of the vehicle at the end of the lease. •How does the value of the depreciated vehicle compare to the residual value stated in the lease, after three years?
  • 50. Practice• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.• Lorem ipsum dolor sit amet, consectetuer Essential of Mathematics 11 adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas. Q 1-3 Page 168-169
  • 51. Insuring and Registering Your Vehicle When you purchase a vehicle you are required by law to register it, buy licence plates for it and to buy insurance for it. The cost for insurance varies with the type of vehicle, your driving record, and the location where your drive most often.
  • 52. Insuring and Registering Your Vehicle
  • 53. InsuranceWhen you insure a vehicle you first pay apremium. The amount of the premiumdepends on: • How you use your vehicle (Rate Class) • Pleasure, all purpose, farm vehicle • Where you live (Territory) • Your claim record • A clean driving record results in discounts
  • 54. Unit 3 – Owning & Operating A VehicleD-2 Solve problems involving the purchase and operation of a vehicle.
  • 55. Insuring and Registering Your Vehicle Example: Use the MPI "Insurance Rate Calculator" to obtain an estimate for the following vehicle. •2009, Chevrolet Cobalt LS, 2-door •Manitoba resident with postal code R4H 1H7, insuring in the Municipality of Winnipeg. •All-purpose insurance with a 10% discount, 500 deductible, $1,000,000 third party liability. •The car will not be insured for Auto Loss of Use or New car protection and the vehicle is not valued at over $50 000 so no selection is required for these. •The payment type chosen is full payment.
  • 56. Practice• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.• Lorem ipsum dolor sit amet, consectetuer Maintenance & Insurance adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas. Worksheet #3
  • 57. Practice• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.• Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Vivamus et magna. Fusce sed sem sed magna suscipit egestas.