Post on 19-Jan-2016
OBJECTIVE 6.00UNDERSTAND SHOPPING OPTIONS AND PRACTICES FOR MEETING CONSUMER NEEDS.
6.02A STUDENTS WILL UNDERSTAND OPTIONS AND PRACTICES FOR MEETING TRANSPORTATION NEEDS.
6.02 ESSENTIAL QUESTIONS
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
DECISION MAKING TIME:STEPS IN MEETING
TRANSPORTATION NEEDS
1. Consider options for transportation needs
2. Set priorities
3. Do the research
4. Make decision
5. Implement
6. Evaluate
STEP 1. CONSIDER OPTIONS FOR
TRANSPORTATION NEEDS Public transit
Taxicabs
Walking, bicycling
Motorcycle, moped
Carpooling
Purchase/Lease of a vehicle
Which options are available in your area?
Which options fit your personal needs in short term or long term?
Which options are within your budget?
STEP 1. CONSIDER 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
STEP 1. CONSIDER 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
OUR AREA 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.
VEHICLE PURCHASE/LEASESTEP 2-SET 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
STEP 3. DO 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
STEP 3. DO THE RESEARCHUSED CARS
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
STEP 3. DO 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
STEP 3. DO 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
STEP 3. DO 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
HOW TO COMPARE MPG
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 EPA
http://www.fueleconomy.gov/feg/printguides.shtml
Actual mileage will vary with options, driving conditions, driving habits, and vehicle condition
STEP 3. DO 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
Research options for financing Lease term- length of contract, usually
24, 36 or 48 months
Up front costs-made when signing lease---includes deposit, taxes, and registration fees
Residual value*-worth of vehicle end of lease; higher residual = lower payments
Monthly lease payments-made by lessee-pays for vehicle depreciation during lease
Interest- generally lower than when buying
At End of Lease
Disadvantage: No asset value in vehicle because you have only been renting
Written into contract:
Disadvantage: End-of-lease costs cover reduced value of vehicle, excess mileage, penalties for ending lease early, significant wear & tear
Option to purchase at end of lease or to extend lease (usually at *residual value)
video link: leasing basics
Leasing: monthly payments in exchange for exclusive use of vehicle for a specified period of time; (like renting an apartment)
STEP 3. DO THE RESEARCHLEASING VS. PURCHASING
video link- leasing benefits
Purchasing---buyer pays cash or takes out a loan and pays for the vehicle with monthly payments---costs more than paying cash because includes interest on amount borrowed
Paying cash from savings
Dealer financing---easy, on-the-spot source
Get separate quotes for car and for financing
Check financing terms at other sources
Check online for rates and terms
Dealer holds title until paid (collateral)
Bank (Credit Union, Financial Institution) Financing
Get separate consumer loan for vehicle
Pay back in installments
Either option may include trading in another vehicle for part of price
Installment loans-regular – repay in monthly payments of approximately same $ until loan paid in full
Secured at banks, credit unions, finance companies, savings & loans
Lender holds title until paid in full
Variables affecting loan:
Length of time to repay (T)Time
Annual percentage rate (R)Rate
Amount of $ borrowed(P) Principle
Review Simple Interest Formula_
I = P R T
STEP 3. DO THE RESEARCHLEASING VS. PURCHASING
O B TA I N AU T O M O B I L E I N S U R A N C E
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
Liability Insurance is Required by NC law
http://www.griffithfoundation.org/uploads/classroom.wmv
The basic concept of insurance
VEHICLE INSURANCE
No-fault auto insurance pays claims regardless of who is at fault
NOT AVAILABLE IN NORTH CAROLINA
WHAT HAPPENS TO YOUR INSURANCE WHEN YOU FILE A CLAIM?
Review Previous slide for or
means points are NOT charged on your insurance
means points apply to your insurance if there is claim on this coverage
Which insurance coverage is required by North Carolina law?
Bodily injury Liability
Property damage Liability
What happens if you do not have this insurance?
Surrender your license tag, pay fine, may impound vehicle
What if you are in an accident and the “at fault” party does not have this coverage?
Your Uninsured Motorist pays for your damages or injuries.
BODILY INJURY LIABILITY COVERAGE
If you are AT FAULT and there are damages, you are 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)
Liability Insurance is Required by NC law
PROPERTY DAMAGE LIABILITY COVERAGE
Property Damage Liability protects the insured person from liability claims for damage to property of others, such as: 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
Liability Insurance is Required by NC law
OPTIONAL AUTO COVERAGE-COLLISION
If you are AT FAULT in an accident and your vehicle is 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
Usually required by creditor if there is a loan
OPTIONAL AUTO COVERAGE-COLLISION
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.
COMPREHENSIVE AUTO INSURANCE
Protects the insured vehicle against damage from almost all damages except collision Fire
Theft
Vandalism
Hail
Windstorm
Windshield damages
Collision with wild animal including fowls
Does NOT charge points when claim is filed
Usually required by creditor if there is a loan
UNINSURED/UNDERINSURED MOTORIST COVERAGE
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
OTHER AUTO COVERAGE
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
FACTORS IMPACTING VEHICLE INSURANCE PREMIUM COSTS
$ 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
AUTO CLAIMS
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
COST OF INSURANCE
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
FACTORS AFFECTING COST OF AUTO INSURANCE
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
video link: auto insurance basics
video link: tips on buying auto insurance
WHAT IF YOU BUY A DEFECTIVE VEHICLE?
www.autopedia.com/#lemonlaw
http://www.ncdoj.com/Consumer/Automobiles.aspx
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