Chapter 6- Consumer Purchasing Strategies and Wise buying of motor vehicles

Buying which of the following items would be timing strategies for purchases that could save you money?

-Buying winter clothes in late winter -Buying holiday decorations in late December and early January -Buying summer clothes in late summer

Which items below are used in determining the cost of an automobile lease?

-Capitalized cost -Money factor----the interest rate paid on the capitalized cost -Residual value - the projected value at the end of the lease -the monthly payments and the number of months

Which of the following are usually covered by a new car warranty?

-Engine, transmission, and drive train -Corrosion coverage for holes due to rust -Basic parts covered against defects

What should you look for when inspecting the ENGINE of a used car for a possible purchase?

-Evidence of leakage of fluids -Smooth clean start

Which of the following are techniques that you should avoid when purchasing a vehicle?

-Leaving a deposit to hold the vehicle -Highballing -Asking how much can you afford per month -Low balling

Which of the following are drawbacks of leasing an automobile?

-No ownership interest in the vehicle -Costs incurred for extra mileage -Costs incurred for certain repairs

Which of the following automobile costs are variable costs?

-Oil Repairs Gas Parking costs and tolls

An individual would benefit from comparison shopping when wanting to purchase which of the following types of products and/or in which of the following situations?

-Products where quality differs greatly among sellers -Products that are sold by many different sellers at various prices -Expensive or complex products

Which of the following would be considered wise buying techniques?

-Seeking coupons and discounts -Evaluating product quality -Comparing brands to determine which is best for your purpose

Which of the following are important considerations when choosing a store at which to shop?

-Selection and services available -Location and prices

Which of the following is a negative equity situation with a car loan?

-Upon selling your car you still owe the bank money on the car loan (over and above your selling price). -The loan amount owed is more than the value of the car.

According to the textbook, when considering the purchase of a used car, a road test should consist of:

-checking brakes at different speeds. -listening for smoothness of acceleration and transmission. -checking the ease of steering and vehicle control.

Which of the institutions are used for auto loans?

-consumer finance companies -banks -credit unions

The factors that influence the price of a used car include:

-features and options -demand for the model -number of miles -condition

Which of the following is NOT true?

A limited warranty states that a defective product can be fixed or replaced within a certain time.

If a 10 pound bag of dog food sells for $6.99, what is the per unit cost of the dog food?

Almost $0.70 per pound

Basic parts covered against defects Engine, transmission, and drive train Corrosion coverage for holes due to rust

Basic parts covered against defects Engine, transmission, and drive train Corrosion coverage for holes due to rust

Which of the following is not something to look for when checking the outside of a used car for possible purchase?

Check ease of steering and vehicle control

Which of the following is not something included in a road test for a used car?

Check oil level and for signs of leaks

Which of the following is something to look for on the inside of the car when inspecting it for possible purchase?

Check operation of gauges

Which of the following is not something to look for when inspecting the engine of a car for possible purchase?

Check the tire tread wear

The second step in wise online buying activities as presented in the text is which of the following?

Compare stores

Wise consumers typically use which two items to achieve better pricing?

Coupons and rebates

Which of the following is NOT a sales technique to avoid when shopping for vehicles?

Deal with a person at the dealership who has authority to give you a lower price

Which of the following would NOT be part of the inspection inside of a used car that you are interested in purchasing?

Drive the car and test the brakes at different speeds

Which of the following is an agreement between a business and a consumer to cover repair costs of a product in return for a fee?

Extended warranty or service contract

True or false: A full warranty covers only certain aspects of the product and requires the buyer to share in the cost of repairs or shipping.

False

True or false: Service contracts and extended warranties are usually a wise purchase because they cover almost anything that could go wrong with the product.

False

True or false: Social factors that affect your buying habits include peer pressure, culture, and inflation.

False

True or false: When a used car is sold "as is," the seller assumes responsibility for any necessary repairs in the first 30 days.

False

A(n) ________ warranty covers a product's intended use or other basic understandings that are not in writing

Implied

Which of the following automobile costs are fixed ownership costs?

Insurance Interest on car loans Registration fees Depreciation

Store-brand and private-label products are which of the following?

Low-cost alternatives to national brands

Which of the following would be included in Phase 3, Selection and Purchase, of the decision-making process for making major buying decisions?

Negotation activities to obtain a lower price

Which of the following is the first phase in a planned decision-making process?

Preshopping activities

According to the text, your decision to use a particular retailer is influenced by location, product selection, services available, and _______

Price

Which of the following items is NOT a factor in the cost of a lease of an automobile?

Price of accessories

Which of the following is not a business that offers automobile maintenance and repair services?

Public Works organizations

Which is the final step in the process of resolving consumer complaints?

Take legal action

A car with a total purchase price of $12,000 is available while a comparable model can be leased for $350 a month for 36 months with end-of-lease costs of $800. Which arrangement should you choose?

The outright purchase because its cost is lower.

Which of the following is an example of a limited warranty?

The parts for your air conditioner will be replaced during the warranty period if damaged, but you will pay for the labor.

Buying holiday items at reduced prices in late December is referred to as what?

Timing a purchase

A unit price of a box of cereal is found by dividing the price of the product by the number of ounces in the product box or container.

True

A wide variety of economic, social, and personal factors affect daily buying habits.

True

As per the book, at the end of the lease, if the residual value of the vehicle is greater than its market value, then you should return the car to the leasing company.

True

Lease payments are often less than loan payments.

True

True or false: The main variables of a car warranty include time, mileage, and parts they cover.

True

True or false: To get better pricing on the items they purchase, many consumers look for coupons or rebates to lower prices.

True

True or false: Well-maintained and certain high-quality vehicles depreciate at slower rates than vehicles not receiving the same level of care or not consisting of the same high quality.

True

True or false: When inspecting the outside of a used car for a possible purchase, inspect the tread on the tires, check the operation of doors and windows, and look for leaking fluids under the car.

True

When attempting to determine the true price of a new car, it is best not to mention a trade-in vehicle until the cost of the new car has been settled.

True

Which of the following is true regarding comparison shopping for used vehicles?

Warranties offered by used-car dealers are usually limited

One possible _________ (advantage/drawback) of leasing an automobile is the smaller upfront cash outlay (i.e., security deposit).

advantage

If you cannot resolve a complaint at the local level, then you should next express your concern to customer service where?

at the corporate level

Dealing with the person who has the ____ to give you a lower price is a vital factor of negotiations.

authority

A used car dealer must display a ________ _______ sticker telling whether the vehicle comes with a warranty.

buyer's; guide

The advantage of _________ preowned vehicles is that there is a rigorous inspection and the original manufacturer's guarantee of quality.

certified

Product labels on appliances include information on operating ________ to assist you in selecting the most energy-efficient models

cost

Until the new-car price is set, you should not indicate that you intend to use the dealer's _______ plan.

credit

The difference between the sticker price and the _____ is the range available for negotiation.

dealer's cost

The loss of a vehicle's value due to time and use and the largest fixed expense of a new car is called ______.

depreciation

An ________ warranty, usually in writing, is created by the seller or manufacturer and has two forms: the full warranty and the limited warranty.

express

You should conduct regular vehicle care in order to _____ the life of your vehicle.

extend

At the end of a car lease, if the market value of the car is less than the residual value, you may be able to sell the car for a profit.

false

True or false: One of the factors that influences the price of buying a used car is capitalized cost.

false

True or false: You should begin the consumer complaint process at the corporate headquarters of the store where the problem began.

false

Depreciation is the largest ______ cost of a new vehicle.

fixed

A _________ (full/limited) warranty states that a defective product can be fixed or replaced during a reasonable amount of time

full

A(n) ______ warranty covers a product's intended use or other basic understandings that are not in writing.

implied

While a used car may not have an express warranty, most states have _______ warranties to protect used-car buyers.

implied

If you buy a five-year-old car that won't run when you try to start it the next day, it is covered under the:

implied warranty of merchantability.

The two key sources of current used-car prices in the United States are Edmund's Used Car Prices and ______ Blue Book.

kelley

Owners of new cars are protected by the _______ laws when repeated attempts have been made to have the car fixed without success.

lemon

The _______ law protects car owners after four attempts to get the same problem corrected or when the vehicle is out of service for more than 30 days within _________ months of purchase or within the first 12,000 miles. This answer applies to most states.

lemon; 12

The various groups to which special new car rebates are sometimes offered include students, teachers, credit union ________, and _________, __________ agents

members; real estates

Brand names are usually:

more expensive, and sometimes the private-label products are manufactured by the same companies that produce the brand-name products.

The common sources of information regarding products during the preshopping phase include personal ________ , business organizations, media, and independent testing agencies such as Consumer Reports.

network

One of the most useful sources of information regarding products during the preshopping phase is _____ that provide buying guidance and shopping suggestions.

online reviews

The information on the label of some food products includes ________ dating that helps the consumer determine freshness or shelf life of a perishable product.

open

When comparing the cost to buy versus the cost to lease an automobile, the ______ cost of the security deposit should be considered.

opportunity

You should not indicate borrowing plans until the price is set on a new car because you should separate the way you will ________ for the car from the negotiations over the price or value of the car.

pay

It is important to have all the necessary information about the product and buying situation when using _______ negotiation to determine the purchase price of cars or real estate. (Enter one word per blank.)

price

Lemon laws require a(n) _______ for the vehicle after the owner has made repeated unsuccessful attempts to get the car fixed by the dealer.

refund

Lemon laws protect car owners after four attempts to get the _________ (same/different) problem correcred or when the vehicle os oit of service for more than _______ days withing 12 months of purchase or the first 12,000 miles

same; different

Sources of automobile servicing include:

service stations independent auto repair shops car dealers

A limited warranty covers only certain aspects of the product and requires the buyer to pay part of the costs for:

shipping or repairs

The two factors that influence driving costs are the:

size of the car and the number of miles you drive.

Well-maintained and certain high-quality vehicles, such as BMW, depreciate at _______ (higher/slower) rates.

slower

The range available for negotiation for a new car is the difference between ______the price and the _______ cost.

sticker, dealers

According to the text, special rebates are sometimes offered to _______, teachers, credit union members, and real estate agents.

students

According to the text, special rebates are sometimes offered to ________ , teachers, credit union members, and real estate agents.

students

To prevent confusion in determining the true price of the new car, you should not mention which of the following until the cost of the new car has been settled?

the existence of a trade-in vehicle

Most consumer complaints are resolved at the original sales location.

true

True or false: Regular care of your vehicle, such as oil changes, tire rotation, inspection of hoses, and brake checks will extend the life of your vehicle.

true

True or false: The drawbacks of leasing an automobile include no ownership in the vehicle and costs for extra mileage, for certain repairs, and for turning the car in early.

true

True or false: The driving costs of an automobile are influenced by the number of miles you drive and the size of the car.

true

Two important sources of used car prices are Edmund's Used Car Prices and the Kelley Blue Book.

true

Banks, credit _______ , and consumer finance companies are all sources of car loans.

unions

The condition of upside-down or negative equity can result with automobile financing when a long payment period is chosen. When this happens, the _______ of the car is less than the loan still _______

value; owned