Car Loans

Question 1

Key Questions
________________:
* The price?
* The down payment?
* The time period for repayment?
* The trade-in?
* The interest rate?

Answer 1

Can I afford this new car based on

Question 2

Shop Around
* Compare prices using the ___________.
* Compare financing options.
* What is a fair interest rate?
* Shop for low rates
* Negotiate a trade in after you have confirmed a price of a vehicle
* Remember that ___________ for
inquiries…

Answer 2

Rule of Three, two-week window

Question 3

Shop Around
Obtain a ___________ for the lowest rate

Answer 3

Loan pre-approval

Question 4

____________ !IMPORTANT!
* Monthly lease payment starts with the Gross Capitalized Cost
* Subtract trade in and down payment
* Subtract residual value
* Money Factor (good way to compare lease vs. buy options)

Answer 4

Lease Payment Calculation

Question 5

Lease
___________:
* Excess Mileage Charge

Answer 5

Other Fees

Question 6

Lease
Other Fees:
* ___________ = expected value of the vehicle at the end of the lease

Answer 6

Residual Value

Question 7

Lease
Other Fees:
* ___________ (“Walk-away” Lease)- no charge if end value is lower than residual value

Answer 7

Closed-End Lease

Question 8

Warranties
_______________:
* FTC requires a “buyers’ guide sticker” (tells if car has warranty and, if so, what it covers)
* Warranty of merchantability

Answer 8

Used Car Warranties

Question 9

Warranties
_______________:
* Basic parts against defects
* Power train coverage (engine, transmission)
* Corrosion warranty (covers holes due to rust)

Answer 9

New Car Warranties

Question 10

Warranties
_______________: “Extended warranty”

Answer 10

Service Contracts

Question 11

Warranties
_______________: Regular warranties = free; Extended Warranties can be overpriced!

Answer 11

Bottom Line

Question 12

Michigan’s Auto Lemon Law
__________ for privately owned passenger vehicles & leased after January 1, 2000, used personal/family/household purposes.

Answer 12

Applies

Question 13

Michigan’s Auto Lemon Law
__________ for larger trucks, motor homes, motorcycles, or off-road vehicles

Answer 13

Does not apply

Question 14

Michigan’s Auto Lemon Law
A ____________ is one in which the same problem has not been repaired after four attempts, or a vehicle that is out of service 30 days or more for repairs

Answer 14

Defective vehicle

Question 15

Michigan’s Auto Lemon Law
A report for a defective vehicle must be made within
_________ from the date of delivery or during the term of the _____________ (shortest)

Answer 15

One year, manufacturer’s warranty

Question 16

_____________ -
* Higher Credit Score = Lower Interest Rate
* Important to establish and build credit

Answer 16

Risk Based Pricing

Question 17

Negotiate your interest rate _________ getting a firm price

Answer 17

Only after

Question 18

Negotiate the ____________ offered through the dealer
* Borrow elsewhere if the rate is ________. (Doesn’t hurt to shop around!)

Answer 18

Lowest possible APR, lower

Question 19

True or False?
In the State of Michigan - Does a “three day cooling
off period exist” – meaning you have three days to
return a car if you do not like it?

Answer 19

False