Vehicle Finance - Part #1. Vehicle Ownership

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Teresa Austin
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1 Vehicle Finance - Part #1 Vehicle Ownership

2 Warm Up Evaluate each percentage: 7% of $120 = 12% of $5,858 = 105% of $25.99 = 30% of $ = Evaluate each expression: x 3-10 = ( x 20-11) = (15)(8) = (1.12)( ) - 10 =

3 Warm Up Evaluate each percentage: 7% of $120 = 0.07 x $120 = $ % of $5,858 = 0.12 x $5,858 = $ % of $25.99 = 30% of $ = 1.05 x $25.00 = $ x $ = $141.95

4 Warm Up Evaluate each expression: x 3-10 = 8 x 3 = 24; = 36; = ( x 20-11) = 1.05 x 20 = 21; = 47; = 36; = 364 (15)(8) = 15 x 8 = 120; = 98; = 143 (1.12)( ) - 10 = = 142; = 105; 105 x 1.12 = 117.6; = 107.6

5 Choosing a Vehicle Buying a vehicle is a major purchase: There is the initial cost, the registration, the insurance, the fuel, and the maintenance costs. These are just a few things to consider when deciding what type of vehicle you can afford to buy and how much money you are able to spend.

6 Choosing A Vehicle Buying a vehicle is a major purchase involving many decisions. Since a lot of money is spend on a vehicle, it is important to make an informed choice. Choose the right vehicle demands considerable research. What are some factors that need to be considered when choosing a vehicle?

7 Affordability If you borrow money to purchase a car, financial planners generally advise that your total monthly debt should be no more than 40% of your net income Maximum Monthly Debt Repayment = 40% x Net Income Net Income = Debt or Loan 40%

8 Example If your monthly net income is $1,200, what is the maximum monthly debt repayment you can afford?

9 Example If your monthly net income is $1,200, what is the maximum monthly debt repayment you can afford? Maximum Monthly Debt Repayment = 40% x Net Income Maximum Monthly Debt Repayment = 40% x $1,200 40% 100 = x $1,200 = $480

10 Example What is the minimum monthly net income that is needed if you wish to take a loan with monthly repayments of $600?

11 Example What is the minimum monthly net income that is needed if you wish to take a loan with monthly repayments of $600? Net Income = Debt or Loan 40% Net Income = $600 40% 40% 100 = 0.40 $ = $1,500

12 Taxes GST and PST must be paid on a new or used vehicle purchased from a dealer In Manitoba and British Columbia, a vehicle purchased privately requires only PST be paid

13 Example A new truck is purchased from a dealer in Winnipeg for $44,036. List the taxes that must be paid on this purchase and calculate the total amount paid.

14 Example A new truck is purchased from a dealer in Winnipeg for $44,036. List the taxes that must be paid on this purchase and calculate the total amount paid. The taxes that must be paid are GST and PST GST = 5% and PST 8% $44,036 x 1.13 = $49, total

15 Repairs and Maintenance Maintenance such as regular oil changes, checking fluid levels, and keeping tires at their proper pressure is important Repairs are another expense. The older the vehicle, the more likely it is to need repairs. The cost of repairs will depend on what is wrong with the vehicle, the repair facility or your ability to fix it, labour rates, the availability of parts, and the year, make, and model of your vehicle.

16 Repairs and Maintenance All repairs and maintenance can be calculated in 3 steps: Find a subtotal by adding up all parts and labour Calculate both taxes Add on taxes

17 Example Jane took her new vehicle to a car dealer in Manitoba for servicing. The oil and the oil filter were changed, and new windshield wiper blades were installed. The cost for parts were as follows: 4 liters of oil = $9.69 per liter 1 oil filter = $ windshield wiper blades = $16.99 each The time required to service Jane s vehicle was 0.6 hours. The shop rate for labour is $110 per hour. How much is this service going to cost Jane in total?

18 Example oil $9.69 x 4 = $38.76 oil filter $14.99 wipers $16.99 x 2 = $33.98 labour 0.6 x $110 = $66 Subtotal = $ $ $ $66 = $ Taxes = GST 5% of = $7.69 PST 8% of = $12.30 Total = = $173.72

19 Example A vehicle is in need of new brakes for $ and a new starter for $250. The service station took 2.8 hours to complete these repairs. The service station s rates for labour is $85 per hour. Find the total cost of servicing for this vehicle.

20 Example brakes = $ starter = $250 labour 2.8 x $85 = $ Subtotal = $ $ = $ Taxes = GST 5% of = $31.90 PST 8% of = $51.04 Total = = $720.89

21 Note: Only GST is charged on labour or services in Manitoba. If a package deal is offered, for example, $25.99 for an oil change, these usually include all parts and labour and then GST and PST are charged. For the purpose of this course, we will calculate both taxes on all vehicle repairs to eliminate confusion.

Complete all of the questions, don't forget to show your work where necessary.

Name: Vehicle Finance - 40S Essentials Complete all of the questions, don't forget to show your work where necessary. 1. The total cost of purchasing a new vehicle is $31,743 plus PST and GST. Terri is