Chapter 9 Vehicle Transportation

9.
1 PURCHASING A NEW VEHICLE
 Sticker Prices are required by law.

 What is included in the sticker price?
 Base Price: the price of the engine, chassis, and any other
piece of standard equipment for a particular model.
 Options: the extras for convenience, safety, or appearance,
such as a sunroof, and air-conditioning.
 Destination Charge: the cost of shipping the vehicle from
the factory to the dealer.
 What are some other things that may be shown on the

sticker of a new vehicle?
 Calculations:
 Sticker Price = Base Price + Options +Destination Charge
9.2 DEALER’S COST
 Dealers pay less than the sticker price for both the basic
vehicle and the options.
 Often reported in consumer magazines as a percent of the
sticker price.
 Once you know the dealer’s cost, what can you figure out?
 You may save money by making an offer that is higher than
the estimated dealer’s cost but lower than the sticker price.
 By subtracting you can figure out the dealer’s profit. This
helps you conclude how much the dealer might be willing to
negotiate on cost.
 Calculations:
 Dealer’s Cost = Percent of Base Price +
Percent of Options Price +
Destination Charge
 Percent of Base Price = Base Price x

Percent of Dealer’s Cost on Base Price
 Percent of Options Price = Total Price of Options x

Percent of Dealer’s Cost on Options
9.3 PURCHASING A USED VEHICLE
 Dealers advertise used vehicles for prices that are

higher than what they expect you to pay.
 Used-Vehicle Guides are published monthly by
the National Automobile Dealers Association
(NADA) or Vehicle Market Research (VMR).
 Give average prices of vehicles
 Can help you make decisions about how much
to pay for a used vehicle.
 The price and availability of repair parts may
make some cars more costly to repair and insure.
It is important to take everything into
consideration.
 Calculations:
 Average Retail Price = Average Retail Value +
Additional Options – Options
Deductions – Mileage Deductions
9.4 VEHICLE INSURANCE
 Liability Insurance: Coverage in case of an accident that causes
bodily injury and property damage.
 If the insurance company offers 25/100:
 The insurance company will pay up to $25,000 to any one person injured.
 The insurance company will pay up to $100,000 if more than one person
is injured.
 Comprehensive Insurance: Protects you from losses due to fire,
vandalism, theft, etc.
 Collision Insurance: Pays to repair your vehicle if it’s in an
accident.
 Deductible Clause: Amount you are required to pay for any
repair bill. (May have a deductible for each type.)
 $100 deductible means you pay the first $100 of the repair bill and
the insurance company pays the remaining amount.
 Cost of Insurance is based on annual base premium.
 Amount of insurance you want.
 How old your vehicle is.
 The insurance-rating group (depends on size and value of the
vehicle).
 Annual Premium: The amount you pay each year for insurance
coverage.
 Annual base premium: depend on amount of coverage you want
 Driver-rating factor: depends on age, marital status, amount of
driving each week, etc
 If more than one driver is being insured than the highest rating is used.
 Insurance companies use tables to determine base premium.
 Calculations:
 Annual Base Premium = Liability Premium +
Comprehensive Premium + Collision Premium
 Annual Premium = Annual Base Premium x Driver-Rating Factor
9.5 OPERATING AND MAINTAINING A VEHICLE
 Things to take into consideration:

 Variable costs: things that increase the more you
drive (gas, tires, etc).
 Fixed costs: things that remain about the same
regardless of how many miles you drive (insurance,
registration, depreciation, etc).
 Depreciation: a decrease in the value of the vehicle
because of its age and condition.
 Calculations:
 Cost per Mile = (Annual Variable Costs + Annual
Fixed Costs) ÷ # of Miles Driven
9.6 LEASING A VEHICLE
 Make monthly payments to the leasing company,
the dealer, or the bank for two to five years.
 You don’t own the car. You are essentially renting
it.
 At the end of the lease, you either return the car to
the leasing company or you purchase it.
 Most common is a closed-end lease.
 You make a specified number of payments, return the
vehicle and owe nothing (unless you damage the vehicle
or exceed the mileage limit).
 If you damage the vehicle or exceed the mileage limit
you owe money to the leasing company.
 Also an open-end lease.
 At the end of the lease you buy the vehicle for its
residual value.
 Residual value is the expected value of the vehicle at the end
of the lease period.
 Often established at the signing of the lease.
 With either you must pay all the monthly payments,

a security deposit, title fee, and license fee.
 Calculations:
 Total Lease Cost = (# of Payments x Amount of
Payment) + Deposit + Title Fee + License Fee
9.7 RENTING A VEHICLE
 Some agencies charge a daily rate plus a per-mile
rate. Others charge a daily rate only.
 Both require you to pay for the gas used.
 May need to pay for insurance.
 Often the insurance has a collision deductible
clause that states that you will pay for a portion of
any damage to the vehicle.
 You can obtain complete insurance coverage with a
collision waiver by paying an additional charge per
day.
 Calculations:
 Cost per Mile = Total Cost ÷ # of Miles Driven

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9.

1 PURCHASING A NEW VEHICLE

 Sticker Prices are required by law.

 What are some other things that may be shown on the

 Percent of Base Price = Base Price x

 Percent of Options Price = Total Price of Options x

 Dealers advertise used vehicles for prices that are

 Things to take into consideration:

 With either you must pay all the monthly payments,

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