Definitions
What word describes the loss of value a car experiences over time?
Depreciation
Before you begin shopping for a used car, what should you figure out to avoid letting emotions guide your decision?
Your budget (income, expenses, and what you can afford)
What is the current average interest rate on auto loans (2023)?
6.1%
What do lemon laws protect consumers from?
Defective cars that repeatedly fail to meet quality/performance standards
What is the average cost of a used car in the U.S. today?
21,000
In Michigan, what does “No-Fault Insurance” mean for who pays damages in an accident?
Your own insurance covers you first, then seeks repayment if possible
What online tool provides a fair estimate of what a vehicle is worth?
Kelly Blue Book
The ________ your downpayment, the _________ your monthly payment, and the _________ you'll pay in the long run.
Higher, lower, less
If you stop making payments, what is one legal right creditors have regarding your car?
They can repossess/seize the vehicle immediately
What type of costs are gas, oil, and repairs considered?
Variable Costs
What is a car called when it is sold without any warranty?
"As-Is"
What are 2 disadvantages of car ownership compared to alternatives like public transportation?
Depreciation, high operating costs, or social costs (pollution/accidents)
What is a cosigner, and why might someone need one?
A person who agrees to take responsibility for the loan if you don’t pay; often needed if under 18 or with no credit history
What is something creditors are not allowed to do when repossessing a vehicle?
Use physical force or threats
-Raise my deductible
-Move out of a city
-Drive a less expensive, less flashy car
-Stay ticket and accident free
-Shop around for lower rates/bundle insurance policies
What do we call a situation when you owe more money on your car loan than the vehicle is worth?
Negative equity / upside-down loan
Never owning the car, fees for mileage use, monthly payment forever
Define residual value
If you buy a used car “As-Is” and it breaks down immediately, who is responsible for repairs?
The buyer
Name three expenses, other than the purchase price, that adds to the overall cost of car ownership.
Insurance, gas, parking, maintenance, registration, financing fees
A PLPD policy written as three numbers, what does each number stand for?
1st - Personal liability (Covers your injuries)
2nd - Covers the injuries of the rest of the accident
3rd - Property Damage (damage done cars/property other than your own)
What is the most important thing to ALWAYS do before buying a USED car?
Take the car to a professional mechanic to check for problems and deduct repair costs from the purchase price
In order to avoid being pressured by dealer financing, you should...
Get pre-approved for a loan and know the loan terms beforehand
What can a buyer do if their car qualifies as a “lemon” under state law?
They may receive a replacement vehicle or refund
In 5 years, how much value does a car lose?
60%