6.5 Buying a Car

Notes

A car is often the second-largest purchase people make. Look at the total cost of ownership, not just the price.

• Costs: purchase price, sales tax and fees, insurance, fuel, maintenance and repairs.
• Depreciation: most cars lose value fast. Example: a $20,000 car that loses 20% in the first year is worth $16,000.
• A down payment is cash paid up front. Example: $20,000 price with $4,000 down means a $16,000 loan.
• Loan total = monthly payment $\times$ months. $400 for 48 months is $19,200.
• Used cars cost less up front but may need more repairs. Research reliability and get a vehicle history report.