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Researching an Automobile

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  • 1. Researching an Automobile What should I look for?
  • 2. Transportation
    • Part of everyone’s life
    • 15 – 20% of an individual’s budget
    • Automobile is the 2 nd most expensive purchase, only after a home
  • 3. Want to Buy a Vehicle?
    • Consumers should plan their vehicle purchase to avoid any costly mistakes
    • Any large purchases should be planned
    • Places to purchase a vehicle:
      • Dealership, private owner, internet
  • 4. Planned Buying Process
    • Prioritizing wants
    • Pre-shopping research
    • Fitting the budget
    • Comparison shopping
    • Negotiating
    • Making the decision
    • Evaluating the decision
  • 5. Step 1 - Prioritizing Wants
    • Assess transportation needs and wants
      • Need: something thought to be a necessity
      • Want: something unnecessary but desired
    • Consider all automobile options as wants
      • Prioritize the wants from low to high priority
        • Prioritizing wants helps the consumer
          • Consider costs and benefits of different vehicle options
          • Consider the “big picture” of the vehicle purchase rather than a specific want (such as heated seats, color, engine size, etc)
  • 6. Prioritizing Wants – Questions to Think About
    • How will the vehicle be used?
    • Where will the buyer be living?
    • How will the vehicle be stored or parked?
    • How much will it be driven?
    • What options would the buyer like in the vehicle?
  • 7. Step 2 – Pre-shopping Research
    • Research should be based on transportation wants
    • Complete this before visiting a car dealership or salesman
    • Helps the buyer to be informed about:
      • What they are looking for
      • Vehicles in their price range
      • Available options
  • 8. Ways to Perform the Research
    • Family & friends
      • Experiences with different makes and models of different vehicles
      • Likes, dislikes, and recommendations
    • Periodicals
      • Consumer Reports
      • Federal Citizen Information Center
      • Kelley Blue Book
      • Motor Trend
      • Car and Driver
    • Access this information at the public library and/or the internet
  • 9. Price Research
    • Price
      • Base price : vehicle price with standard equipment, no extra options
      • MSRP: Manufacturer’s suggested retail price
        • Includes base price, price of options installed by manufacturer, and their transportation charge
      • Sticker Price
        • Dealer’s initial asking price
  • 10. Price Research continued
    • Price continued
      • Determine how much a dealer paid to help decide which vehicles to consider and to negotiate a fair price
        • Consumer Reports, Kiplinger’s Personal Finance magazine, and Edmund’s New Car Prices
      • Used cars
        • Blue book price: dollar value given to the vehicle based on its year and model
        • Used as a guide for car dealers and banks for pricing trade-ins
          • Kelley Blue Book
  • 11. Vehicle Options Research
    • General type of vehicle
      • Car, truck, 2-door, SUV, sporty
    • Make and model
      • Ford Taurus, Honda Accord
    • Safety
      • Braking and emergency handling, airbags
    • Reliability
      • Some specific models have high marks, may be higher priced but will save on repair costs
  • 12. Vehicle Options Research continued
    • Fuel economy
      • Type of gas used, gas mileage
    • Power and performance
      • Driving on highways, steep hills, mountains, snow, muddy roads, or in a city
    • Comfort and convenience
      • Size of headroom and legroom, cargo space
  • 13. Vehicle Options Research continued
    • Insurance
      • Chosen vehicle affects the price of insurance; obtain a quote for the vehicles being considered
    • Other options
      • Power steering and brakes, manual or automatic, air conditioner, rear-window defogger, radio/tape/CD player, type of tires, cruise control, sun roof, heated seats, power door locks and windows, etc.
  • 14. New vs. Used Research
    • New Vehicle:
      • Not pre-owned
      • Warranty
      • Manufacturer options
      • Wide selection
      • Expensive
      • Depreciation
        • Loss in the vehicle’s value due to time and use (greatest cost)
    • Used Vehicle:
      • Cost less to buy
      • Cost less to insure
      • Avoid rapid deprecation
      • Wide selection
      • May offer warranty
      • Returned leased cars
      • Have an independent mechanic inspect any used car before purchase
  • 15. Step 3 – Fitting the Budget
    • “ Can I afford it?”
      • Most important question
    • Amount the buyer can afford in his/her budget dictates the vehicle price
    • All costs must be taken into consideration before choosing a vehicle
  • 16. Fitting the Budget continued
    • Fixed expenses
      • Depreciation
      • Insurance costs
      • Loan payment and interest if financed
      • Parking fees
      • Licensing
      • Registration
    • Flexible expenses
      • Maintenance
      • Gas
      • Oil
      • Repairs
    * Vehicle price is not the only cost involved
  • 17. Stop to complete activity
  • 18. Step 4 – Comparison Shopping
    • Comparing services or products to determine the best buy or quality product at a fair price
    • Allows the consumer to build upon the information learned in the pre-shopping research
    • *As the price of a vehicle increases, consumers are often not buying additional safety, capacity, or power, but instead style and prestige
  • 19. Comparison Shopping continued
    • Narrow the choices to a few specific makes and models with desired options
    • Visit the appropriate store to learn more information about each choice to make comparisons
      • Inquire about price, dealer incentives, financing options, leasing, warranties, and service contracts
    • Test drive each potential vehicle
  • 20. Comparison Shopping continued
    • Goal of comparison shopping
      • Narrow the choice even further to negotiate for the best deal
  • 21. Step 5 - Negotiating
    • Process of deciding the actual terms of the purchase and agreement between the seller and buyer
    • Obtain a firm price before discussing any other aspects including a trade-in
    • Compare prices from different dealers
      • Let them know you have done your research and whether their price is high
  • 22. Negotiating continued
    • Keys to all negotiations
      • Be able to say NO
      • Take the purchase to another business
  • 23. Step 6 – Making the Decision
    • The best place to decide on which vehicle to purchase is NOT the showroom where you are around the dealer
      • Take the information home to compare all options
    • After making the decision, return to the dealer to close the sale
  • 24. Step 7 – Evaluating the Decision
    • Think about the things which went well and what did not
      • This will be helpful the next time a similar purchase is made
    • If the process was successful and you are happy, compliment the seller
    • If you have a complaint, make the complaint known to the seller then move to the supervisor if necessary
  • 25. Lemon Laws
    • Lemon
      • A vehicle in and out of the repair shop with problems monthly
    • An estimated new 150,000 vehicles sold each year are lemons.
        • Money Troubles, 2001, Leonard
    • All states have enacted lemon laws
      • Specifics vary state-to-state and are in place to protect consumers
  • 26. Lemon Laws continued
    • To fall under the lemon law
      • New vehicle must have a substantial defect which cannot be fixed in a reasonable time
      • Defect remains unfixed after four repair attempts or the vehicle remains in the repair shop for a total of 30 days
    • This allows the consumer the right to a refund or a new vehicle
  • 27. Lemon Laws continued
    • What should you do if you feel you have purchased a lemon?
      • Contact the state’s attorney general office to request information on the state’s lemon laws and how to use them if they have purchased a lemon
  • 28. Conclusion
    • Before purchasing a vehicle, follow the planned buying process to avoid a costly mistake
      • Prioritize wants
      • Pre-shopping research
      • Fit the budget
      • Comparison shop
      • Negotiate
      • Make the decision
      • Evaluate the decision