1. www.eXtension.org/militaryfamilies
facebook.com/militaryfamilies
blogs.eXtension.org/militaryfamilies
twitter.com/MilFamLN
bit.ly/MFLNwebinars
To receive notifications of future webinars and other learning opportunities from the
Military Families Learning Network, sign up for the Military Families Learning Network
Email Mailing list at: http://bit.ly/MFLNlist
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award No. 2010-48869-20685.

2. A few days after the presentation, we will send an evaluation and links to an archive
and resources.
We appreciate your feedback. To receive these emails, please enter your email
address in the chat box before we start the recording.
Once we start the recording, all chat will be recorded and archived.
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award No. 2010-48869-20685.

3. •
»
»
»

5. https://learn.extension.org/events/1327

6. CAR PURCHASING
STRATEGIES
Elaine A. Courtney
University of Florida/IFAS Extension
Okaloosa County
ecourtne@ufl.edu

7. WHAT ARE THE
SECRETS TO WISE
CAR BUYING?
Preparation
Shopping
Negotiating

8. Has this ever happened to you?
• SKIT

9. Preparing to Purchase
• Needs, wants?
• How much can I afford?
• Financing

10. The Dream…

11. Research
• Auto Types
• Reliability
• Safety www.hwysafety.com
• Gas mileage
• http://www.fueleconomy.gov
• Insurance for type of auto

12. Chat Question
• Have you ever looked up the maintenance cost prior to
purchasing?

13. The car should fit your
budget
Do the math!

14. Transportation as part of the budget
On average, Americans spend the following percentages of
their income in each category:
Food
13-15%
Housing
32-42%
Education/
Recreation
0-10%
Gifts/
Contributions
0-10%
2-10%
Child Care
15-25%
Clothing
3.8-4.2%
Personal
2-5%
Misc./
Emergency
Transportation
17-18%
Savings
0-10%
Medical
6-7%
Insurance
0-11%
Source: Florida Master Money Mentor, Budgeting PowerPoint, 2010.

15. Get ahead before it is time to buy
Make a car payment to yourself
Monthly
Amount
$200
$200
Number of
Annual
Months
Percentage
Yield
24
1%
48
1%
Total
$4,846
$9,790
Save $50/week or about $6.67/day

16. Check your credit report
• www.annualcreditreport.com
• Check for errors
• Pre-qualify with bank, credit union or other lender
• If not offered comparable interest rates, ask why
• New federal laws

17. Auto Loan, Average Rate Example
Type
Loan Term
Rate
New
48 months
2.6%
Used
36 months
48 months
2.0%
2.7%
Used
36 months
2.6%
Source: Bankrate.com, Jan. 6, 2014

18. Get a PAL!
• Preapproval
• Credit Union
• Bank
• Need not reveal details to salesperson

19. How will you pay
•Cash
•Determine the amount to be borrowed
•Research financing options
•Bank
•Credit Union
•Dealership

20. Impact of Interest Rates
Purchase Price
$10,000
$10,000
$10,000
$10,000
$10,000
Down Payment
$2,000
$2,000
$2,000
$2,000
$2,000
Amount Financed
$8,000
$8,000
$8,000
$8,000
$8,000
Interest Rate
6.0%
10%
14%
18%
22%
Loan Term (months)
36
36
36
36
36
Monthly Payment
$243
258.14
273.42
289.22
305.52
Total Finance
Charges
761.68
1293.04
1843.12
2411.92
2998.72

21. Impact of Shortening the Loan Term
3 Years
(36 Months)
5 Years
(60 Months)
7 Years
(84 Months)
Amount Financed
$20,000
$20,000
$20,000
Contract Rate (APR)
6.5
6.5
6.5
Monthly Payment
$612
$391
$297
Total Payments
$22,032
$23,460
$24,948
Finance Charges
$2,032
$3,460
$4,948
The person taking 84 months pays $2,916 more interest
than the person paying the car off in 36 months.

22. New car depreciation
• Depreciation – decrease in value
• Drive new car off lot
• Used car
• Average depreciation 20%

23. Upside down
on a car loan
• Owe more on the car than it is worth

24. Avoid being upside down
• Down payment of 20% or more
• Especially if it is a new car
• Pay off car as soon as possible
• Try to avoid loans that are more than 48 months
• Avoid expensive interest rates

25. Impact of down payment
48 month loan term for all
Down Payment
$0
$5,000
Amount Financed
20,000.00
15,000.00
Interest Rate (APR)
5.00%
5.00%
Monthly Payment
460.59
345.44
Total Payments
22,108.32
16,581.12
Finance Charges
2,108.32
1,581.12
$10,000
10,000.00
5.00%
230.29
11,053.92
1,053.92
Source: FINRA Loan Calculator, http://apps.finra.org/Calcs/1/Loan

26. Consider the whole picture
• Auto loan
• Consider the total cost
• Avoid short term thinking such as only considering monthly
cost
• Maintenance
• Gasoline
• Insurance

27. Get the best deal
• Don’t combine transactions:
• Trade-in
• New Car
• Financing
• You will get a better deal if you negotiate each one
individually
• Or if you sell to a private party
• Be cautious when dealing with strangers

28. Poll Question
• Are you planning to purchase a new or used automobile?

29. Buying Like
an Expert

30. Getting Ready to Go
•
What to bring
• The invoice price for the car you are interested in
• Checkbook and/or cash for downpayment
• Loan pre-approval forms
• Auto insurance information, including proof of
• Driver’s license
• Social security card
• Title and registration, if you are trading in a car
• Who to Bring
• If vehicle will be jointly-owned, bring spouse
• Friend who is not emotionally involved in the situation

31. The Goal of the Game
• Most car salesmen are playing the same game with
the same basic game plan
•
Goal:
•
•
•
Sell you a car
At a high price, so they make maximum commission
Once you understand the game, you:
•
•
Deal effectively with the car salesman
Get what YOU want

32. The “Greeting” and Test Drive
AKA: Salesman’s attempt to lead you through
specific steps that will lead him to his goal
•
•
•
•
•
•
•
•
Greets you warmly
Asks you some “innocent” questions
Shows you a car HE suggests is right for you
Does the “walk-around”
Invites you to sit in the car
“How about a test drive?”
Back at the dealership, do-or-die moment
Customer’s curiosity is peaked

33. Negotiating the Selling Price
1. Salesman will ask basic questions
-- Tries to make the negotiating start out friendly
2. He will want to discuss monthly payments
- Never negotiate based on monthly payments
-- “I’m not interested in discussing monthly payments.
I only want to talk about the selling price of the vehicle.”
--- Negotiate up from dealer’s cost
3. How will you be paying for the vehicle?
- “I only want to talk about the selling price right now.
We can discuss finances later.”

34. Negotiating the Selling Price
4. YOU are the one who will determine the way the
negotiations go!
- He will continue to try to back into his game
- It’s up to you to keep things on track
-- Stay strong and focused on your buying goals
FIRST Rule of Negotiating
Never appear anxious, worried, or desperate.
Remain calm, casual, and willing to walk away at any
time.

35. Negotiating the Selling Price
5. Tell him you are ready to make an offer
- Let him know that “you are in no hurry to buy a car;
however, if my offer is accepted, I am prepared and
willing to sign the papers and drive the car home today.”
SECOND Rule of Negotiating
Never negotiate down from the sticker price.
Always negotiate UP from the invoice price (new cars)
or wholesale price (used cars).

36. Negotiating the Selling Price
6. Once you’ve made an offer, be quiet
- Sit and wait for a response
-
The salesman will probably insist your offer is too low
Negotiating Tip
Whoever speaks first after an offer is made is in the weaker
negotiating position
7. The salesman will try to get you to raise your bid
Negotiating Tip
Never negotiate against yourself
Never raise your own bid until they make a counteroffer

37. Negotiating the Selling Price
8. Let the games begin
- The salesman will walk over to the Sales Manager’s office
-- Sit back and relax
--- Sooner or later, the salesman will return
---- He and/or his Sales Manager will present their
counteroffer
---- Sit and think
---- They will probably speak first to break the
tension
---- At the appropriate moment, show your flexibility
by raising your bid
Negotiating Tip
Always raise your offer in small increments $50 - $100
at a time

38. Negotiating the Selling Price
9.
The game will go on
- Back and forth
--- Shake their heads
--- Try to get you to spend more than you have
planned
10. Eventually, your offer will rise to your pre-set limit
- When it does, FREEZE!
-- Don’t budge
11. If they won’t sell at YOUR price
- Thank them and leave
-- If they WILL sell at YOUR price…

39. Closing the Deal
• Negotiations finally end when
•
They are convinced you absolutely cannot or will not
go any higher in your price
•
They know they are making a profit…
even a minimal one

40. Gap Insurance
• Upside down on car loan
• Auto insurance pays off market value
• Gap pays off any difference
• Need if likely to be upside down
• Extra long loan term
• No money down
• Do not purchase unless necessary
• Compare prices
• Dealer
• Lender

41. Surviving the Business Office
•
Selling price agreed to..sent to Business Office
• Discuss financing
• Pre-approved financing
• Dealership financing
• Cash
• Read ALL fine print
• Think twice about all those “extras”
• Extended warranty
• Paint protection / fabric protection
• Rustproofing /Undercoating
• Alarm systems
• Window Etching
• Window tinting
• Insurance: disability, life
• Etc.
• Remember…
The Business Manager is another salesperson working on
commission

42. Negotiating
Negotiate the price of the car,
not the payments.

43. SKIT

44. THOUGHT TO REMEMBER…
Car buying is a
process…
not an event!!!

45. Congratulations!
YOU
are now in control of the
“Car Buying Game!”

46. Summary
• Consider all costs
• Save for a down payment
• Get a PAL
• Do your research
• Negotiate

47. Sources
• Consumer Federation of America,
•
•
•
•
Car Buying Power Points and Brochures.
Consumer Reports
Edmunds.com
US Air Force FTAC Curriculum
Florida Master Money Mentor Curriculum