Auto Financing 101:                                    Making Smart                      Vehicle Financing Decisions1   Wa...
Vehicle Ownershipand Your Financial Future • Economic empowerment     – Increased job opportunities     – Increased earnin...
ARE YOU                 GET   TO MAKE YOUR DECISION                       TO THE DEALERSHIP3   Wali Memon
STEP 1:ARE YOU           Prepare your budget                   Item                    Amount                   INCOME    ...
ARE YOU           STEP 2:                  Save for a down payment                       Down Payment                     ...
ARE YOU                 STEP 3:                        Know your Credit Condition                        www.AnnualCreditR...
ARE YOU                           STEP 4:                                  Maximize your credit score                     ...
ARE YOU           STEP 5:                  Do you need a Co-Signer?                    Creditor may require if you have   ...
Research vehiclesGET            TO MAKE YOUR   within your price range               DECISION                             ...
Shop around              TO MAKE YOUR   for vehicle financingGET           DECISION                                       ...
Leasing                         Buying              TO MAKE YOURGET           DECISION                                Owne...
Leasing                        Buying              TO MAKE YOURGET           DECISION                              Future ...
TO MAKE YOURGET           DECISION 13   Wali Memon
Completing a                          Credit Application                          • Name             TO THE       • Social...
You can often negotiate                          your APR just as you would                          the price of the car ...
Stay within your price range                                  Discipline pays off!!             TO THE             DEALERS...
Optional Products             TO THE             DEALERSHIP17   Wali Memon
Read Your Contract                                Quality Auto Credit, Inc.                                12345 Smith Hwy...
Make your payments on time!  Opportunity to build good credit –  or damage your credit  Finance company holds  a lien on t...
Discussion20   Wali Memon
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Auto Financing 101

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Auto Financing 101

  1. 1. Auto Financing 101: Making Smart Vehicle Financing Decisions1 Wali Memon
  2. 2. Vehicle Ownershipand Your Financial Future • Economic empowerment – Increased job opportunities – Increased earning potential • Improved quality of life, time with family • Opportunity to improve overall credit picture 2 Wali Memon
  3. 3. ARE YOU GET TO MAKE YOUR DECISION TO THE DEALERSHIP3 Wali Memon
  4. 4. STEP 1:ARE YOU Prepare your budget Item Amount INCOME $1,500 EXPENSES Rent $600 Utilities $75 Transportation $260 Food $275 Medical expenses $35 Clothing $75 Leisure activities $80 Miscellaneous $50 TOTAL $1,450 SAVINGS $50 4 Wali Memon
  5. 5. ARE YOU STEP 2: Save for a down payment Down Payment = Monthly Payments 5 Wali Memon
  6. 6. ARE YOU STEP 3: Know your Credit Condition www.AnnualCreditReport.com or (877) 322-8228 •Credit information •Public Record information •Credit Inquiries •Personal Information 6 Wali Memon
  7. 7. ARE YOU STEP 4: Maximize your credit score • Improve your payment history • Lower your amounts owed • Make the most of the length of your credit history • Shop wisely for new credit • Manage the types of credit you have 7 Wali Memon Source: Fair Isaac Corporation
  8. 8. ARE YOU STEP 5: Do you need a Co-Signer? Creditor may require if you have little or poor credit history – Young or first-time buyers often need a co-signer Co-signer is often beneficial to high credit risk customers: – Can typically help to secure lower finance rates – Gives an opportunity to improve credit history with demonstration of timely payments 8 Wali Memon
  9. 9. Research vehiclesGET TO MAKE YOUR within your price range DECISION www.nadaguides.com www.jdpower.com www.edmunds.com 9 Wali Memon
  10. 10. Shop around TO MAKE YOUR for vehicle financingGET DECISION Finance Credit Banks Dealerships Companies Unions COMPETITION Provides Economically access to benefits all credit for consumers all credit risks 10 Wali Memon
  11. 11. Leasing Buying TO MAKE YOURGET DECISION Ownership You do not own the vehicle You own the vehicle Up-front May include 1st month’s Cash price or down costs payment, refundable payment, taxes, security deposit, capitalized registration, other cost reduction (like down fees & charges. payment), taxes, registration, other fees & charges Monthly Typically lower than Typically higher payments financing – only paying for than leasing – depreciation. paying for entire purchase price. Early You may have to pay a You must pay the termination substantial early pay-off amount if termination fee if you end you end the the lease early. financing early. 11 Wali Memon Source: “Keys to Vehicle Leasing,” Federal Reserve
  12. 12. Leasing Buying TO MAKE YOURGET DECISION Future value If you return the vehicle at Because you own lease end (and don’t the vehicle, you exercise any option to buy), take on the risk of the lessor takes on the risk future market of future market value. value. Mileage Most leases limit the annual You may drive as miles (often 12,000 – many miles as you 15,000 per year). You can want, and take on negotiate a higher mileage the risk of a lower for a fee. You must pay any resale or trade in excess mileage fees at end value based on the of lease. mileage. Excessive Most leases limit wear and There are no limits wear charge extra at lease end to wear, but you for excess wear. take on the risk of a lower resale or trade in value based on wear. 12 Wali Memon Source: “Keys to Vehicle Leasing,” Federal Reserve
  13. 13. TO MAKE YOURGET DECISION 13 Wali Memon
  14. 14. Completing a Credit Application • Name TO THE • Social Security number DEALERSHIP • Date of birth • Current/previous addresses • Current/previous employment • Income sources • Total gross income • Information on existing credit accounts14 Wali Memon
  15. 15. You can often negotiate your APR just as you would the price of the car TO THE DEALERSHIP • Research other financing sources in advance • Know what kind of a credit risk you are • Make yourself a strong applicant15 Wali Memon
  16. 16. Stay within your price range Discipline pays off!! TO THE DEALERSHIP16 Wali Memon
  17. 17. Optional Products TO THE DEALERSHIP17 Wali Memon
  18. 18. Read Your Contract Quality Auto Credit, Inc. 12345 Smith Hwy, Springfield, TX TO THE 76021 DEALERSHIP18 Wali Memon
  19. 19. Make your payments on time! Opportunity to build good credit – or damage your credit Finance company holds a lien on the vehicle Talk to your creditors if having difficulty paying Wali Memon 19
  20. 20. Discussion20 Wali Memon

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