1. OBJECTIVE 6.00
U NDERSTAND SHOPPING
OPTIONS AND PRACTICES FOR
MEETING CONSUMER NEEDS .
6.02A S TUDENTS WILL
UNDERSTAND OPTIONS AND
PRACTICES FOR MEETING
TRANSPORTATION NEEDS .

2. 6.02 E SSENTIAL
Q UESTIONS
 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

3. D ECISION M AKING T IME :
S TEPS IN MEETING
TRANSPORTATION NEEDS
 1. Consider options for transportation needs
 2. Set priorities
 3. Do the research
 4. Make decision
 5. Implement
 6. Evaluate

4. S TEP 1. C ONSIDER OPTIONS FOR
TRANSPORTATION NEEDS
Public transit  Which options are
available in your
Taxicabs area?
 Which options fit
Walking, bicycling
your personal needs
Motorcycle, moped in short term or long
term?
Carpooling  Which options are
within your budget?
Purchase/Lease of a
vehicle

5. S TEP 1. C ONSIDER 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

6. S TEP 1. C ONSIDER 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

7. O UR A REA
 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.

8. VEHICLE PURCHASE / LEASE
S TEP 2-S ET 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

9. S TEP 3.
D O 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

10. S TEP 3. D O THE RESEARCH
U SED C ARS
 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

11. S TEP 3. D O 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

12. S TEP 3. D O 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

13. S TEP 3. D O 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

14. H OW TO COMPARE MPG
http://www.fueleconomy.gov/feg/printguides.shtml
 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
Actual mileage will vary with options, driving conditions,
driving habits, and vehicle condition

15. S TEP 3. D O 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

16. S TEP 3. D O THE RESEARCH
L EASING V S . P URCHASING
Research options for Leasing: monthly payments in exchange for
financing exclusive use of vehicle for a specified period
of time; (like renting an apartment)
 Lease term- length of contract, usually 24,
36 or 48 months
 At End of Lease
 Up front costs-made when signing lease--
-includes deposit, taxes, and registration  Disadvantage: No asset value in
fees vehicle because you have only been
renting
 Residual value*-worth of vehicle end of
lease; higher residual = lower payments  Written into contract:
 Monthly lease payments-made by lessee-  Disadvantage: End-of-lease costs
pays for vehicle depreciation during lease cover reduced value of vehicle,
excess mileage, penalties for ending
lease early, significant wear & tear
 Interest- generally lower than when
buying  Option to purchase at end of lease or
to extend lease (usually at *residual
value)
video link: leasing basics
video link- leasing benefits

17. S TEP 3. D O THE RESEARCH
L EASING V S . P URCHASING
 Purchasing---buyer pays cash or takes out a loan and pays for  Installment loans-regular – repay in
the vehicle with monthly payments---costs more than paying monthly payments of approximately
cash because includes interest on amount borrowed same $ until loan paid in full
 Paying cash from savings  Secured at banks, credit unions,
finance companies, savings & loans
 Dealer financing---easy, on-the-spot source
 Lender holds title until paid in full
 Get separate quotes for car and for financing
 Check financing terms at other sources  Variables affecting loan:
 Check online for rates and terms  Length of time to repay (T)Time
 Dealer holds title until paid (collateral)  Annual percentage rate (R)Rate
 Amount of $ borrowed
 Bank (Credit Union, Financial Institution) Financing (P) Principle
 Get separate consumer loan for vehicle
 Review Simple Interest Formula_
 Pay back in installments
 I=PRT
 Either option may include trading in another vehicle for
part of price

18. O BTAIN AUTOMOBILE INSURANCE
http://www.griffithfoundation.org/uploads/classroom.wmv
The basic concept of insurance Liability Insurance is
Required by NC law
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

19. V EHICLE I NSURANCE
 No-fault auto insurance pays claims  Which insurance coverage is required by
regardless of who is at fault North Carolina law?
 NOT AVAILABLE IN NORTH  Bodily injury Liability
CAROLINA
 Property damage Liability
WHAT HAPPENS TO YOUR  What happens if you do not have this
INSURANCE WHEN YOU FILE A insurance?
CLAIM?
 Surrender your license tag, pay fine, may
 Review Previous slide for  or  impound vehicle
 means points are NOT charged on  What if you are in an accident and the “at
your insurance fault” party does not have this coverage?
 means points apply to your insurance  Your Uninsured Motorist pays for your
if there is claim on this coverage damages or injuries.

20. B ODILY I NJURY L IABILITY
C OVERAGE
Liability Insurance is  If you are AT FAULT and there are damages, you are
Required by NC law 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)

21. P ROPERTY D AMAGE L IABILITY
COVERAGE
 Property Damage Liability protects the insured
person from liability claims for damage to
Liability Insurance is property of others, such as:
Required by NC law
 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

22. O PTIONAL A UTO C OVERAGE -
C OLLISION
Usually required by  If you are AT FAULT in an accident and your vehicle is
creditor if there is a loan 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

23. O PTIONAL A UTO C OVERAGE -
C OLLISION
 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.

24. C OMPREHENSIVE A UTO
I NSURANCE
 Protects the insured vehicle against damage
from almost all damages except collision
Usually required by
creditor if there is a loan  Fire
 Theft
 Vandalism
 Hail
 Windstorm
 Windshield damages
 Collision with wild animal including fowls
 Does NOT charge points when claim is filed

25. U NINSURED /U NDERINSURED
M OTORIST C OVERAGE
 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

26. O THER A UTO C OVERAGE
 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

27. FACTORS IMPACTING VEHICLE
I NSURANCE P REMIUM C OSTS
 $ 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

28. A UTO C LAIMS
 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

29. C OST OF I NSURANCE
 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

30. FACTORS A FFECTING C OST
OF
A UTO I NSURANCE
 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

31. video link: auto insurance basics
video link: tips on buying auto insurance

32. W HAT IF YOU BUY A
DEFECTIVE VEHICLE ?
 www.autopedia.com/#lemonlaw
 http://www.ncdoj.com/Consumer/Automobiles.aspx
 Class Activity