Transcription— Auto Financing
[Steve is standing at the front desk of a car dealership.]
Narrator: This is Steve.
[Steve begins to walk away from the front desk as the receptionist of the car dealership waves to him.]
Narrator: Steve has just decided to purchase a new car.
[Steve walks by a sign in the car dealership which says “Pay $375/month!” in very large print. Below the large print, the sign says “*for 96 months *conditions apply” in very small print.]
Narrator: He is paying $375 per month for the next 96 months, which is equivalent to 8 years.
[The screen zooms in on the sign.]
[The scene changes to an image of Steve in the driver’s seat of his new car.]
Narrator: After Steve purchases his new car, he realizes that the monthly payments are only part of the total cost.
[The screen zooms in on Steve and he looks surprised. Steve begins to scratch his head in confusion.]
[The scene changes to a blue background. An image of a calendar appears on the left side of the screen and the words ‘Monthly Payments’ are written above. An addition symbol appears to the right of the calendar. The following three images appear in consecutive order on the right side of the addition symbol: a fuel pump, a piece of paper with the words ‘Auto Insurance’ and a tire with tools.]
Narrator: In addition to his monthly loan payments, Steve also has to pay for things such as gas, car insurance, and maintenance costs.
[The scene changes back to Steve in the driver’s seat of his new car.]
Narrator: Steve begins to realize that the cost of his new car is more expensive than what he had originally budgeted for.
[Steve is holding his wallet and negative dollar signs float out of his wallet. Steve looks concerned.]
[The scene changes to an image of a graph. The bottom horizontal axis of the graph begins at ‘Year 0’ and ends at ‘Year 8’. In the top left corner of the graph there is an image of Steve’s new car. Extending from the bottom of the image of the car there are 2 lines, one blue and one red. The blue line represents the car value and the red line represents the loan balance of the car. The red line is a straight downward diagonal line which intersects with the bottom horizontal axis at ‘Year 8’. The blue line is a downward diagonal line as well which interests with the bottom horizontal axis at ‘Year 8’, however the blue line is not straight. The blue line starts above the red line at ‘Year 0’ and the lines intersect just after ‘Year 1’.]
Narrator: In addition to his car costing him more than he had anticipated, Steve’s car has depreciated in value over time.
[The image of the car moves down the graph from ‘Year 0’ to ‘Year 2’. The amount ‘$27,000’ appears next to the red line and the amount ‘$22,000’ appears next to the blue line.]
Narrator: After about 2 years, Steve’s outstanding loan balance is more than the actual value of the car.
[The scene changes to Steve and Emilie in their living room of their house. Steve is playing with their child and Emilie is rocking their baby.]
Narrator: After a few years of owning the car, Steve gets married and has children.
[The scene changes to an image of Steve thinking about his family.]
Narrator: Now that Steve has a wife and children, he needs a larger vehicle that is more family friendly.
[The image of Steve’s family disappears and the screen zooms out. An image of Steve’s car appears next to him and a red circle with a diagonal line through it appears on top of Steve’s car. The image of Steve’s car with the red circle overtop shrinks in size and an image of a larger sports utility vehicle appears next to Steve.]
[The scene changes to an image of Steve’s car with the text “Car value = $22,000” written below the image. An arrow is pointing from Steve’s car to an image of a larger sports utility vehicle.]
Narrator: Steve wants to trade in his current car for a larger vehicle, but unfortunately he owes more than his car is worth.
[The text ‘Loan balance = $27,000’ appears below the image of Steve’s current car.]
[The scene changes to Steve back the front desk of the car dealership. Steve looks upset at the receptionist is talking to him.]
Narrator: Steve did not understand all of the risks associated to the longer-term car loan and he realizes now that the longer-term loan was not the best option.
[The scene changes to Steve sitting at the desk in his home office and he is typing on his laptop. Steve types the following into his search bar: ‘Financial Consumer Agency of Canada – financing a car’.]
Narrator: Steve should have done some research on financing before agreeing to the loan terms of his car.
[The screen zooms out and splits in half. On the right side of the screen there is a white background where Steve is typing. Steve types the title ‘Tips on using auto financing’.]
Narrator: Before Steve purchases his new larger vehicle, he does the following…
[Steve creates the first bullet point and he types the following: ‘realistic budget’. The left side of the screen changes to an image of Steve’s monthly budget.]
Narrator: Steve creates a realistic budget so he knows how much he can afford before visiting the dealership.
[The left side of the screen changes back to Steve sitting at the desk in his home office typing on his laptop.]
[Steve creates a second bullet point and he types the following: ‘shop around and negotiate’. The left side of the screen changes to a blue background divided into four quadrants. An image of Steve talking to an auto financing expert appears in the top left quadrant. An image of a laptop with the words ‘Financing options’ appears in the top right quadrant. An image of a bank appears in the bottom left quadrant, and an image of Steve talking to a bank teller appears in the bottom right quadrant.]
Narrator: Steve shops around and negotiates for the best financing possible. He researches different financing options through the dealership and his bank, and he negotiates based on the total price of the vehicle, rather than focussing on a low monthly payment.
[The left side of the screen changes back to Steve sitting at the desk in his home office typing on his laptop.]
[Steve creates a third bullet point and he types the following: ‘shortest-term loan possible’. An image of a thinking bubble appears next to Steve’s head and an image of a clock and money appear within the thinking bubble.]
Narrator: Steve chooses the shortest-term loan that his budget will allow because he knows that the longer-term car loans can leave him owing more than his car is worth.
[Steve creates a fourth bullet point and he types the following: ‘total cost of the vehicle’. The left side of the screen changes to a blue background and an image of a large sports utility vehicle appears. Five bubbles appear on the screen below the image of the vehicle. The first bubble contains an image of a cheque with the words ‘principal amount’ written below. The second bubble contains an image of an irregular arrow with the word ‘interest’ written below. The third bubble contains an image of a tire with two tools above and the words ‘expected maintenance’ written below. The fourth bubble contains a small piece of paper with the words ‘Auto Insurance’ written on it and the word ‘insurance’ written below. The fifth bubble contains an image of a fuel pump with the word ‘gas’ written below.]
Narrator: Lastly, Steve focusses on the total cost of the vehicle including the principal amount, interest, expected maintenance, insurance, and gas.
[The scene changes to Steve standing outside of his house next to his new sports utility vehicle as he is waving to his family. There is a chain attached to the back of his vehicle which is pulling a sac with the words ‘old car debt’ written on it.]
Narrator: Steve purchases a larger vehicle for him and his family, while also still paying off the money that he owes on his previous car.
[Steve drives away in his new vehicle.]
[The scene changes to Steve and Emilie sitting in an office setting with their BIA Insolvency Counsellor.]
Narrator: At your in-person counselling session discuss auto financing with your BIA Insolvency Counsellor.
