Chapter 6: Consumer Purchasing Strategies & Wise Buying of Motor Vehicles

Legal options for Consumers?

-Small Claims Court -Class Action Suits -Using a Lawyer -Other legal alternatives ◦Legal aid society ◦Prepaid legal services

Arbitration

decision is binding

Highballing

high trade in offer + high new car price

Money Factor

interest rate

Lowballing

low price quote increases with last minute add ons

Set Price Dealers

no haggling

Label Information

open dating

Mediation

third party negotiates (nonbinding)

Express Warranty

usually written, full warranty or limited warranty

Implied Warranty

warranty of title, warranty of merchantability

Step 2 Communication with the Company, resolving consumer complaints?

-"Contact Us" on firm's website -Use e mail or letter

Phase 2 evaluating alternatives for research based buying

-Attribute assessment and comparison -Price analysis -Comparison shopping

Step 3 Consumer Agency Assistance, resolving consumer complaints?

-BBB provides pre purchase information -File a complaint online with BBB -mediation -arbitration -State consumer protection office or agency

Financing

-Banks, credit unions, other financial institutions, finance companies, or dealer financing -Get preapproved for a certain amount.

New Car Warranties

-Basic parts against defects -Power train coverage -Corrosion warranty

Vehicle Servicing Options

-Car dealers -Service stations -Independent Auto Repair Shops -Mass Merchandise Retailers like Sears and Wal Mart -Specialty shops such as oil/lube, muffler, transmission, and tire shops -Be alert for signs of fraud!

Consumer Buying Activities

-Daily buying decisions involve trade offs. -Wide variety of economic, social, and personal factors affect daily buying habits. -Long term stability is achieved by not spending your entire current income. -Overspending leads to misuse of credit.

Fixed Costs for automobile operation costs?

-Depreciation -Interest on loan -Insurance -License, registration, and taxes

To negotiate a used car price one uses?

-Edmund's used car prices -Kelly blue book

Price Bargaining

-compare dealers -car buying services=auto broker

Residual Value

-expected value of the vehicle at the end of the lease -Return, keep, or sell the vehicle. -If the residual value < market value, return it.

Sales techniques to avoid when price bargaining for new cars include?

-lowballing -highballing -"How much can you afford per -Never leave a deposit unless ready to buy. -"Your price is only $100 above our -Sales agreements with preprinted amounts

Capitalized Cost

-price of the vehicle -Average buyer pays 92% of list. -Average leaser pays 96% of list.

Phase 1 preshopping activities for research cased buying

-problem identification -information gathering

Sticker Price

-suggested retail price -includes base price + accessories

Practical Purchasing Strategies

-timing purchases -purchase location -brand comparison -label information -Price Comparison

Personal Consumer Protection

1.Do business only with reputable companies. 2.Avoid signing contracts you do not understand. 3.If it seems too good to be true, it probably is! 4.Compare the cost of using credit vs. cash. 5.Avoid rushing to a good deal (impulse buying).

Upside Down Equity

= car is worth less than amount still owed on the loan ( negative equity; if you default or sell the car, you will have to pay the difference

Step 1 Initial Communication, resolving consumer complaints?

Calm, rational, persistent approach

Used Car Warranties

FTC required "buyers' guide sticker"; Warranty of merchantability

Lemon Laws

Laws that protect consumers from the consequences of buying a defective car.

Purchase Location

Location, price, selection, services

Timing Purchases

Price variations with the time of the year

Brand Comparison

Private label or store brands vs. national brands

Warranties

Written guarantee from manufacturer or distributor specifying the conditions under which the product can be returned, replaced, or repaired

The more new cars sold, the more used cars there are for sale, keeping what ?

prices down

Sales Agreement

specific details

Step 4 when resolving consumer complaints suggests?

take legal action

Comparison Shopping can be beneficial when?

-Buying expensive or complex items -Buying items that you purchase often -Easily done with ads, catalogs, or online -Different sellers offer different prices and services -Product quality or prices vary greatly

Variable Costs for automobile operation costs?

-Gas and oil -Tires -Maintenance and repairs -Parking and tolls

During phase of determining purchase price negotiation may lower price or add features and is needed to?

-Have all the necessary information. -Deal with a person who has the authority to give you a lower price or additional features.

Motor Vehicle Maintenance

-Keep good expense records. -At least follow the maintenance schedule in the manual. (More frequent intervals may minimize major repairs.)

Phase 4 postpurchase activities for research based buying

-Maintenance and operation -After sale service alternatives -Resolution of purchase concerns Maintenance and ownership costs are associated with most major purchases. -Proper operation yields improved performance and fewer repairs. -Investigate, evaluate and negotiate a variety of servicing options. -Complain if not satisfied with a purchase. -Lemon Laws are instituted in all 50 states and the District of Columbia.

Performance Options

-Mechanical devices -Engine size, transmission, power steering, cruise control, and antilock brakes

Aesthetic Features

-Metallic paint -Special trim -Leather interior -Sunroof

Payment Schedule

-Monthly payment amount -Number of payments

Phase 3 selection & purchase for research based buying

-Negotiation -Payment alternatives -Acquisition and installation

Common sources of used cars include?

-New car dealers -Used car dealers -Private sales -Auctions and dealers sell previously owned cars -Used car superstores such as CarMax -CPO = Certified Pre Owned

The disadvantages of leasing a motor vehicle includes?

-No ownership interest -Must meet requirements -May have additional costs for extra mileage, turning the car in early, or for certain repairs

Comfort & Convenience Options

-Power seats, air conditioning -Stereo systems, power locks

Price Analysis

-Prices can vary for all types of products. -Assess differences in quality relative to price -Price and quality are not always closely related.

The advantage of leasing a motor vehicle includes?

-Small cash outflow -Lower monthly payments than buying -Lease provides detailed records helps if you use your car for business purposes -Able to obtain a more expensive car more often

Price Comparison

-Unit pricing = standard unit of measurement -Coupons and rebates -More store convenience-----> higher prices -Ready to use products ----->higher prices -Large is not always the best buy check unit prices. -"Sale" prices not always a -Online sources can save time.

Invoice Price

-dealer's cost -consumer reports -Edmund's New Car Prices

Until Price of the New Car is settled?

-do not mention any trade in -do not mention dealer financing

Service Contracts

extended warranty