Let's Buy a Car! | Teacher Resources | Financial Literacy | Khan Academy

[Music]

Con Academy financial literacy theater proudly presents the purchase.

This is Wall-E. Say hi to the people, Wall-E.

Hi to the people, Wall-E!

Wally is about to buy a car from a dealership.

Oh boy! Unfortunately for Wally, he is the world's most gullible man.

What does gullible mean?

Look up, WALL-E. The definition is written on the ceiling.

It is?

It isn't. To be gullible is to be easily manipulated, to fall for every last trick in the book.

He's a pushover.

Whatever Wall-E does while buying a car, you probably shouldn't do.

Let's begin at the dealership.

Wall-E, ha! I knew you were a winner from the moment you filled out that contact form.

I got to say, buddy boy, everything looks swell!

Gosh, I can't wait to drive this automobile off the lot!

Now, let's talk about that.

I know you were interested in the KA7.

Yes! What a car!

I have bad news. That car is no longer available.

But we do have a JJ Cramer!

Oh, for the same price, just a little bit more. You'd hardly notice the difference.

This tactic is called the bait and switch.

Wall-E came in intending to get one car, but the dealer is claiming to only have access to a more expensive one.

He came in for the bait, and they switched it out for something else. A classic confidence trick.

But, but I saw several KA7s in the lot!

Those have all been sold. They're waiting for pickup.

Oh jeez, okay, well how long till the next ones come in?

Who can say? Supply chains, you know. Everything's so messed up lately. Could be weeks, months, never!

Wow, I guess let's go look at what you've got then.

Here we are, a JJ Cramer!

Wow, that sure is a car!

This is the premium trim too, the JJ Cramer QX.

What's in the premium trim?

I was thinking of maybe the more basic model.

Sure, you could do that, but you'd miss out on the heated leg lamps, the 360...

This is another classic dealership move, the upsell.

Trying to package in the premium features to bump that total price up just a little bit more.

And the undercarriage lighting.

And does this still fall within my budget?

I told you I didn't want to spend more than $155,000.

Uh, you said the Cramer was just a bit more. How much is a bit?

Hm, $5,000 more.

What? What? One more time please!

$5,000 more. That's not just a bit!

Listen, Wall-E, do you want those add-ons or not?

This is a high-end automotive platform we're looking at here.

I, I, I guess so. I mean I have a budget to stick to, you know.

I have every confidence that we can get you out of here with a low monthly payment.

How does under $300 a month sound?

Gosh, that sounds great!

Okay, I can't take this anymore.

Wally, come with me!

Dealer, you stay put!

But sh... wow, where are we?

The realm of numbers, Wallace. A place of pure thought.

Gosh, now when the dealer said they were going to offer you a car payment for under $300 a month, did you notice something missing?

She didn't say please!

They didn't say how long the loan term was!

Sure, you can get that price under $300 a month, but they do it by extending the loan period.

Watch! Say the car costs $20,000 and you put down a 10% payment right off the bat.

Okay.

If you do that for 48 months, that's about $431 a month, and at 7% interest, you're looking at another $2,689 in interest.

But if you do that for 78 months, suddenly your monthly payment is $287, but your total interest jumps to $4,456.

They're making way more money in interest off that longer loan.

Do you see what I'm saying, Wall-E?

I do! You're going to get ripped off. I know! This isn't even the car you wanted!

It isn't?

So get back in there and stand up for yourself!

Yeah, okay! I'm going to send you back!

3, 2, 1!

I'm not really sure I'm interested in this car. I think I'd like to hold out for a KA7.

You know those cars don't have a lot of resale value!

That's okay.

Okay, I'm intending to have it for a long time.

The Cramers are flying off the lot, buddy boy! You might miss your chance to own this magnificent titan of the road!

Wall-E, a lot of folks are interested in these cars!

WALL-E! WALL-E! Don't you want to catch the weight?

You are saying my name a lot!

Listen, if you drive away in the JJ Cramer today, I'll throw in some paint and sealant for free!

That's a $250 value, W-E! You're going to leave that money on the table!

You know, if it's all the same to you, I might take some time to think it over.

I, I don't like being pushed around.

Thanks!

Who's pushing?

Wally, do you see me pushing?

I would never push!

Okay, I'm going to head out. Thanks for your time.

Lost another one.

Hey, nice work, W-E!

So tell me, what's your plan for next time?

I'm going to be firm on the model of car I want to get.

Great!

I'm going to resist unnecessary add-ons.

Yeah, you are!

I'm going to use a payment calculator so I can know ahead of time what my monthly payment should look like.

Ad a boy!

I won't be swayed by scare tactics and demands to make an immediate decision.

That's right!

Heck, do I even want a new car?

Now you're cooking!

Do I even need a car at all?

W, there! Galaxy brain!

All right, which way to the bus stop?

That way!

Be smart!

The negotiation to buy a car is in a dealership-based model, a battle of wits and wills.

Read up on more common tactics you'll face in your car buying journey on our website conacademy.org and look for the financial literacy section.

That does it for this episode of Con Academy financial literacy theater.

Thank you and good night!

[Music]