4. Jane Skinner has just graduated from college and would like to purchase her f

Question

4. Jane Skinner has just graduated from college and would like to purchase her first car. She is unfamiliar with the purchasing process but thinks that she could probably afford to pay about $350 per month on a loan or lease. She has about $3000 in her savings account to use a possible downp ayment. If you were asked to guide her through this buying experience, what type of advice would you give her as far as researching the car, buying new or used, negotiating the price, and financing the loan?

Explanation / Answer

On a preferential note, she should look for a brand which provides good service after sale of the car. The features of car she should look for are fuel efficiency, longer life span for its auto parts, and comparatively low maintenance cost. It is better to buy a new car comparatively. A used car can be purchased if she needs that for a shorter period. She can afford a car of price up to $30,000 on her payment terms. The negotiation will come in the picture if she likes to buy an old car. In this case, it is advice able to hold out for the lowest possible price with her dealer and finish this process rationally. For the financial loan, she should choose a bank which offers loan at lowest APR (Annual Percentage Rate). It is the rate which represents actual yearly cost of loan and includes all the cost associated with the loan.

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