Chapter 6

Unit pricing...

uses a standard unit of measurement to compare the prices of packages of different sizes. Unit price= cost / number of units

2) Variable Operating costs

gasoline and oil, tires, maintenance and repairs, parking and tolls

Full warranty

states that a defective product can be fixed or replaced during a reasonable amount of time

Open dating describes...

the freshness or shelf life of a perishable product. Most expiration ates refer to quality, not safety.

Express warranty

(usually in written form) and is created by the seller or manufacturer and has two forms: the full warranty and the limited warranty.

when leasing, know the true cost of the vehicle

- Capitalized cost (price of the vehicle) -Money factor (the interest rate being paid on the capitalized cost -Payment schedule ( the amount paid monthly and the number of payments) -Residual value (the expected value of the vehicle at the end of the lease)

Useful Information Sources

- Personal contacts: allow you to learn about product performance, brand quality, and prices from others - Business organizations: offer advertising, product labels, and packaging that provide information about price, quality, and availability. - Media Information: can provide valuable information with purchasing advice -Independant Test Organizations: such as Consumer Unions in its monthly Consumer Reports, provide information about the quality of products and services. - Government Agencies: local, state, and federal, provide publications, toll-free telephone numbers, websites, and community programs. -Online Reviews: can provide buying guidance and shopping suggestions.

Leasing drawbacks

- no ownership interest in the vehicle - must meet requirements similar to qualifying for credit - additional costs may be incurred for extra mileage, certain repairs, turning the car in early, or even moving to another state

Leasing advantages

- small cash outflow - lower monthly payments than buying - lease provides detailed records- helps if you use your car for business purposes

Sales Techniques to Avoid

-Lowballing - low price quote increases with last minute add-ons -Highballing - high trade-in offer + high new car price -"How much can you afford per month?" -Never leave a deposit unless ready to buy -"Your price is only $100 above our cost." -Sales agreements with preprinted amounts - Attempts to upsell vehicle - Efforts to inflate the loan interest rate of lengthen the term of the loan -Not informing you of the dealer rebates or price-matching offers

To avoid scams of online used-car sellers:

-research the sellers reputation -do a title check -beware of vehicle photos with tempting low prices -check any recalls and the safety record of the vehicle -don't buy a car if you aren't allowed to have a mechanic inspect it

Practical Purchasing Strategies

-timing purchases (seasonal) -Purchase Location -brand comparison -label information -price comparison

The largest fixed expense associated with a new automobile is DEPRECIATION

... the loss in the vehicle's value due to time and use

Consumer protection experts suggest that to prevent being taken by deceptive business practices, you should:

1) do business only with reputable companies with a record of satisfactory customers 2) avoid signing contracts and other documents you do not understand 3) be cautious of deals that seem too good to be true compare the cost of buying on credit with the cost of paying c cash; also compare the interest rates the seller offers with those offered by a bank or credit union 4) avoid rushing to get a good deal; successful con artists depend on impulse buying

2 vital factors in negotiation

1) having all the necessary info about the product and the buying situation 2) dealing with a person who has the authority to give you a lower price or additional features, such as the owner of store manager

to minimize consumer problems before making a purchase:

1) obtain recommendations from friends, family, and online reviews 2) verify company affiliations, certifications, and licenses 3) understand the sale terms, return policies, and warranty provision

Wise Online Buying Activities

1. Conduct Online Research 2. Compare Stores 3. Make Purchase 4. Plan For Future Purchases

Research-Based Buying

1. pre-shopping activities: problem identification, information gathering 2. evaluating alternatives: attribute assessment and comparison, price analysis, comparison shopping 3. selection and purchase: negotiation, payment alternatives, acquisition and installation 4. post-purchase activities: maintenance and operation, after-sale service alternatives, resolution of purchase concerns

Optional Equipment for Vehicles can be viewed in 3 categories:

1.) mechanical devices to improve performance ( power steering, power brakes, and cruise control) 2.) Convenience options (power seats, AC, audio system, power locks, tinted glass) 3.) Aesthetic features that add to the vehicles visual appeal ( paint, upholstry)

daily What factors affect your buying habits?

Economic, social, and personal factors

sources of current used car prices

Edmunds Used Car Prices and the Kelly Blue Book

High tech safety features to help avoid crashes

Forward collision warning Automatic emergency breaking blind spot warning adaptive cruise control lane-keeping assist lane departure warning

When selecting a lawyer, consider several questions:

Is the lawyer experienced in your type of case? Will you be charges on a flat-fee basis, at an hourly rate, or on a contingency basis? Is there a fee for the initial consultation? How and when will you be required to make payment for services?

class action suit

a legal action taken by a few individuals on behalf of all the people who have suffered the same alleged injustice

Rebate

a partial refund of the original price of the product

Small Claims Court

a person may file a claim involving amounts below a set dollar limit most states have a limit between $2,500 and $10k. the process usually takes place without a lawyer, although in may states attorneys are allowed in small claims court.

Arbitration

a third party tries to settle a grievance through a legally binding process

Warranty

a written guarantee from the manufacturer or distributor that states the conditions under which the product can be returned, replaced, or repaired.

Service contracts

an agreement between a business and a consumer to cover the repair costs of a product -frequently called extended warranties but IS NOT a warranty

Dealers Cost/Invoice price

an amount less than the sticker price

Comparing Used Vehicles

avg cost of a new car costs about $10k less than the avg new car 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

Auto loans are available from...

banks, credit unions, consumer finance companies, and other financial institutions

Resolving Consumer Complaints

1-initial communication 2-communicate with the company 3-consumer agency assistance 4-legal action (Litigation)

Comparison Shopping can be beneficial when...

1. Buying expensive or complex items 2. Buying items that you purchase often 3. Comparison shopping can be done easily, with advertisements, catalogs, or online 4. Different sellers offer different prices & services 5. Product quality or prices vary greatly

Implied warranty

covers a product's intended use or other basic understandings that are not in writing

Limited warranty

covers only certain aspects of the product, such as parts, or requires the buyer to incur part of the costs for shipping or repairs

1) Fixed Ownership Costs

depreciation, interest on auto loan, insurance, license, registration, taxes, and fees

an implied -warranty of merchandise-

guarantees that the product is fit for the ordinary uses for which it is intended

Product labeling for appliances includes...

information about operating costs to assist you in selecting the most energy-efficient models

Mediation

involves the use of a third party who tries to resolve the complaint between the consumer and the business

legal aid society

one of a network of publicly supported community law offices that provide legal assistance to consumers who cannot afford their own attorney