ConsumerMan Video for LifeSmarts 10: BUYING A CAR

Lesson Plan

Overview

Whether new or used, buying a vehicle is probably the largest purchase a teenage will make. While those

in the business sell cars every day, the average consumer has little experience buying a vehicle. Knowing

some basic strategies can make the process less stressful.

Lesson Objective

Review basic information related to the process of purchasing a new or used vehicle.

Time

1 class period

Background

The purchase of a vehicle can be divided into several separate transactions:

1. Select the appropriate vehicle.

2. Negotiate the purchase price.

3. Determine the value of the trade-in.

4. Acquire the most advantageous financing.

The well-informed consumer is aware that there are hundreds of cars and dealers to choose from. So it is

wise to consider each part of the transaction carefully, going step-by-step. Negotiating a “good deal”

takes patience and an understanding of the process.

Materials

 Lesson Vocabulary List Prompts

 Lesson Vocabulary List

 Video-Buying a Car

 Activity Key-Just the Facts – Buying a Car

 Video Activity- Just the Facts – Buying a Car

Resource: Federal Trade Commission Consumer Information-Buying a Used Car:

http://www.consumer.ftc.gov/articles/0055-buying-used-car

Procedures

1. Distribute Vocabulary List Worksheet

2. Assign students to define only the vocabulary they are confident they understand.

3. Clarify and define vocabulary with the large group.

4. Distribute the Just the Facts – Buying a Car to each student. Review the activity instructions and

allow time for students to complete their work.

5. View the video Buying a Car

6. Review and discuss answers to Just the Facts – Buying a Car.

Discussion Questions and Statements

1. React: Because of the serious impact on the environment, teenagers do not need cars.

2. React: Teenagers who are pulled over for texting or talking on cell phones should have their licenses

suspended.

3. Parents can now purchase “safe driver” devices that monitor the driver’s speed and track vehicle

location via GPS. What are the advantages and disadvantages of this technology?

4. Owning and driving a vehicle is a luxury most teenagers in the world never experience. Explain how

American teens view this privilege.

ConsumerMan Video for LifeSmarts 10:

Buying a Car Vocabulary List Prompts

Name:

base price

Cost of a vehicle with standard equipment; no options or upgrades

book value

Estimated market or trade-in worth of a used vehicle as published in a

guide by businesses such as Kelley Blue Book, Edmunds or NADA

extended warranty

Service contract that provides for no cost or low cost vehicle repair,

after the factory or dealer warranty expires

FTC Used Car Rule

The rule that requires all used car dealers to place a "Buyers Guide" in

a conspicuous place in each used vehicle they offer for sale

factory warranty

Promise by the vehicle manufacturer to repair or replace defective

components for a specific period of time

invoice price

Approximate price the dealership pays to the manufacturer for the

vehicle

lemon laws

These state laws protect buyers when vehicles have serious defects

Monroney sticker

A window sticker, required by law to be placed on every new vehicle,

includes information such as MSRP and fuel economy

NHTSA

National Highway Traffic Safety Administration, the federal agency

dedicated to achieving the highest standards of excellence in motor

vehicle and highway safety

recall

When a safety defect is discovered, the manufacturer is required to

remedy the problem at no charge to the owner

registration

Legally recording ownership of a vehicle with a government agency

for tax and licensing purposes; the registration certificate is carried in

the vehicle

title

Document that shows legal ownership of a vehicle

VIN

Vehicle Identification Number, a unique code used by the automobile

industry to identify and track each vehicle manufactured

ConsumerMan Video for LifeSmarts 10:

Buying a Car Vocabulary List

Name:

base price

book value

extended warranty

FTC Used Car Rule

factory warranty

invoice price

lemon laws

Monroney sticker

NHTSA

recall

registration

title

VIN

ConsumerMan Video for LifeSmarts 10:

Just the Facts-Buying a Car Activity Key

Name:

DIRECTIONS: The statements below are either true or false. Read the statement and decide whether it is

true or false. Circle true or false to indicate your choice. Correct the false statements by adding

information to the statement.

For example, There are twenty questions on this worksheet is a false statement. Correct this statement

by clarifying—There are fifteen questions on this worksheet, NOT by adding a negative such as, There are

not twenty questions on this worksheet.

When buying a vehicle, one of the most important parts of getting a “good deal” is

making sure the monthly payments are affordable.

Car buying experts advise that the “good deal” is based on negotiating the total

vehicle price. The monthly payment can be determined and adjusted after the price

is agreed upon.

True

False

When buying a vehicle, begin your negotiations with the invoice price.

The invoice price is close to the price the dealer paid the manufacturer. The dealer

may receive additional incentive from the manufacturer, but buying a vehicle for

close to invoice price is good negotiation.

True

False

Once you have decided on the vehicle you want to purchase and have negotiated

the price, go to the bank or credit union to discuss financing.

Before you enter a dealership, discuss financing with the financial institution. Ask

about the type of loan, how much interest you’ll pay, and the terms of the contract.

Know what price point you can afford and the total cost if you finance through your

financial institution.

True

False

Focusing only on the monthly payment could result in paying too much for a vehicle.

The monthly payment is not a true indicator of the cost of the car and never the

price to negotiate.

True

False

When a trade-in is part of a vehicle purchase, the dealer will offer the best price for

the trade-in because they want to make a sale.

Consumers should always check “book value” for their trade-in before they

negotiate. There are a number of website that offer calculators to help estimate a

vehicle’s worth; examples include Edmunds, Nada Guides and Kelley Blue Book.

True

False

The invoice price tells exactly what the dealer paid for the vehicle.

Car manufacturers create incentives and purchase programs for car dealers. These

incentives can change the dealer’s price, but the invoice gives the buyer a good

indication of the approximate cost.

True

False

The consumer does not buy cars every day, but they do have the most important

negotiating “tool.”

As expert Jack Gillis says, the consumer’s most effective bargaining tool is the 180-

degree turn and walk away. If the buyer feels uncomfortable or feels they have been

treated with disrespect, they can leave the dealership.

True

False

Purchasing a used car can save the consumer an average of 25% in overall ownership

and operating costs.

The savings are even larger. A used car can save the consumer 50% of those costs.

True

False

One should investigate insurance costs before making a final decision to purchase a

vehicle.

Experts recommend getting estimates from three different insurance companies. For

teens, insurance is a significant expense.

True

False

One of the first steps in the vehicle buying process is to discuss the amount of your

monthly payments with the salesperson.

Discuss the monthly payment schedule only after you have negotiated the final price

of the vehicle. Monthly payments do not reflect the total purchase price.

True

False

When buying a used vehicle, it saves money for the consumer to request that the

dealership give the car a thorough inspection before the sale is complete.

Before completing the sale it is a good idea to have any vehicle inspected, but use an

independent source to get a non-biased assessment of the vehicle.

True

False

The largest cost factor when owning a new vehicle is depreciation.

Typically, the most expensive cost of car ownership is the first year of depreciation.

While the average is a 20% loss of value, some vehicles lose up to 40%.

True

False

The Federal 3-Day Cooling Off Rule applies to new, not used vehicles.

The 3-Day Cooling Off Rule does not apply to any vehicle purchase; it is primarily for

items you purchase in the home.

True

False

Invoice price and base price are identical.

The invoice price is the manufacturer’s price to the dealer. The base price is the price

of a vehicle with standard equipment, no options or upgrades.

True

False

Lemon law is a mandated federal standard that outlines a consumer’s rights when a

vehicle has a unique problem that does respond to repair.

Lemon laws are determined by federal legislation, under the Magnuson-Moss Act,

and also by state statutes.

True

False

ConsumerMan Video for LifeSmarts 10:

Just the Facts-Buying a Car Activity

Name:

DIRECTIONS: The statements below are either true or false. Read the statement and decide whether it is

true or false. Circle true or false to indicate your choice. Correct the false statements by adding

information to the statement.

For example, There are twenty questions on this worksheet is a false statement. Correct this statement

by clarifying—There are fifteen questions on this worksheet, NOT by adding a negative such as, There are

not twenty questions on this worksheet.

When buying a vehicle, one of the most important parts of getting a “good deal” is

making sure the monthly payments are affordable.

True

False

When buying a vehicle, begin negotiations with the invoice price.

True

False

Once you have decided on the vehicle you want to purchase and have negotiated

the price, go to the bank or credit union to discuss financing.

True

False

Focusing only on the monthly payment could result in paying too much for a vehicle.

True

False

When a trade-in is part of a vehicle purchase, the dealer will offer the best price for

the trade-in because they want to make a sale.

True

False

The invoice price tells exactly what the dealer paid for the vehicle.

True

False

The consumer does not buy cars every day, but they do have the most important

negotiating “tool.”

True

False

Purchasing a used car can save the consumer an average of 25% in overall ownership

and operating costs.

True

False

One should investigate insurance costs before making a final decision to purchase a

vehicle.

True

False

One of the first steps in the vehicle buying process is to discuss the amount of your

monthly payments with the salesperson.

True

False

When buying a used vehicle, it saves money for the consumer to request that the

dealership give the car a thorough inspection before the sale is complete.

True

False

The largest cost factor when owning a new vehicle is depreciation.

True

False

The Federal 3-Day Cooling Off Rule applies to new, not used vehicles.

True

False

Invoice price and base price are identical.

True

False

Lemon law is a mandated federal standard that outlines a consumer’s rights when a

vehicle has a unique problem that does respond to repair.

True

False