PF C6

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

The range available for negotiation for a new car is the difference between the _____ price and the _____ cost

sticker invoice

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

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

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

Comparing Financing Alternatives

Auto loans are available from banks, credit unions, consumer finance companies, and other financial institutions.

Consumer Buying Activities

Buy now: cash or credit? Or save and buy later? Which path is for you? Daily buying decisions involve a trade-off between current spending and saving for the future. Economic, social, and personal factors affect your daily buying habits. These factors are the basis for spending, investing, and achieving financial goals. In very simple terms, the only way you can have long-term financial security is to not spend all of your current income. In addition, overspending leads to misuse of credit and financial difficulties.

Personal Consumer Protection

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 satisfying customers. 2. Avoid signing contracts and other documents you do not understand. 3. Be cautious of deals that seem too good to be true- they probably are! 4. Compare the cost of buying on credit with the cost of paying cash; also, compare the interest rates the seller offers with those offered by a bank or a credit union. 5. Avoid rushing to get a good deal; successful con artists depend on impulse buying

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

Label Information

Federal law requires that food labels contain certain information. Product labeling for appliances includes information about operating costs to assist you in selecting the most energy-efficient models. Open dating describes the freshness or shelf life of a perishable product. Phrases such as "Use before May 25, 2022" or "Not to be sold after October 8" appear on most food products. However, these labels can be confusing. Most expiration dates relate to quality, not safety. Items used after the "sell by" date are likely to still be safe for consumption. Canned and packaged food items, if not opened, will usually be safe beyond the expiration date.

Price Comparison

To calculate the unit price, divide the price of the item by the number of units of measurement, such as ounces, pounds, gallons, or number of sheets (for items such as paper towels and facial tissues_. Then compare the unit prices for various sizes, brands, ands stores.

Automobile Operation Costs

1. Fixed Ownership Costs - depreciation, interest on auto loan, insurance, license, registration, taxes, and fees. 2. Variable Operating Costs - gasoline and oil, tires, maintenance and repairs, parking and tolls. The largest fixed expense associated with a new automobile is depreciation, the loss in the vehicle's value due to time and use. Well-maintained vehicles and certain high-quality, expensive models, such as BMW and Lexus, depreciate at a slower rate.

Information Gathering

1. Personal contacts allow you to learn about product performance, brand quality, and prices from others. 2. Business organizations offer advertising, product labels, and packaging that provide information about price, quality, and availability. 3. Media information (websites, apps, television, magazines) can provide valuable information with purchasing advice. 4. Independent testing organizations, such as Consumers Union in its monthly Consumer Reports, provide information about the quality of products and services. 5. Government agencies, local, state, and federal, provide publications, toll-free telephone numbers, websites, and community programs. 6 Online reviews can provide buying guidance and shopping suggestions. Be cautious since some may be fictitious postings.

Other Legal Alternatives

A legal aid society is one of a network of community law offices that provide legal assistance to people who cannot afford their own attorney. These community agencies provide this assistance at a minimal or no cost.

Used-Car Price Negotiation

Other sources of current used-car prices are Edmund's Used Car Prices and the Kelley Blue Book. Various factors influence the price of a used car, such as the number of miles it has been driven along with features and options. A low-mileage car will have a higher price than a comparable car with high mileage. The condition of the vehicle and the demand for the model also affect price.

Which of the following is NOT true regarding class action suits?

People impacted by a bad product must participate in a class-action and not sue on their own

Step 4: Legal Action

The Legal Options for Consumers section various legal alternatives available to resolve consumer problems.

Phase 3: Determining Purchase Price

Two vital factors in negotiation are (1) having all the necessary information about the product and the buying situation, and (2) dealing with a person who has the authority to give you a lower price or additional features, such as the owner or store manager.

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

opportunity

Warranties

An express warranty; usually in written form, is created by the seller or manufacturer and has two forms: the full warranty and the limited warranty. A full warranty states that a defective product can be fixed or replaced during a reasonable amount of time. A 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.

Step One: Initial Communication

Most consumer complaints are resolved at the original sales location

Class-Action Suits

Occasionally, a number of people have the same complaint. A class-action suit is a legal action taken by a few individuals on behalf of all the people who have suffered the same alleged injustice. These people are represented by one or more lawyers. Once a situation qualifies as a class-action suit, all affected parties are notified. At this point, a person must decide whether to opt in or opt out. Nonrespondents will not be part of the complaint. If a plaintiff chooses not to participate in the class-action suit, the person may select to file an individual lawsuit.

Using a Lawyer

When selecting a lawyer, consider several questions: Is the lawyer experienced in your type of case? Will you be charged 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?

Small Claims Court

In small claims court, a person may file a claim involving amounts below a set dollar limit. The maximum varies from state to state, ranging from $500 to $25,000; most states have a limit of between $2,500 and $10,000. The process usually takes place without a lawyer, although in many states attorneys are allowed in small claims court. To effectively use small claims court, experts suggest that you: - become familiar with court procedures and filing fees (usually from $5 to $50) - observe other cases to learn about the process - present your case in a polite, calm, and concise manner - submit evidence such as photographs, contracts, receipts, and other documents - use witness who can testify on your behalf

Step 2: Communicate with the Company

If a problem is not resolved at the local level, express your concern to customer service at the corporate level. Call or use a letter or e-mail. You can obtain contact information for companies through an online search or at www.nsa.gov. This information is also commonly included on product packages.

Phase 4: Post-purchase Activities

In the past, when major problems occurred with a new car and the warranty didn't solve the difficulty, many consumers lacked a course of action. As a result, all 50 states and the District of Columbia enacted lemon laws that require a refund for the vehicle after the owner has made repeated attempts to obtain servicing.

Price Bargaining For New Cars

The difference between the sticker price and the dealer's cost is the range available for negotiation. Other sales techniques you should avoid include: - Lowballing, quoted a low price that increases when add-on costs are included. - Highballing, offered a high amount for a trade-in vehicle; the extra amount is made up by increasing the new-car price. - The question "How much can you afford per month?" Be sure to also ask how many months. - An offer to hold the vehicle for a small deposit only. Never leave a deposit unless you are ready to buy a vehicle or are willing to lose your deposit. - Unrealistic statements, such as "Your price is only $11 above our cost." Usually, hidden costs have been added in to get the dealer's cost. - Sales agreements with preprinted amounts. Cross out numbers you believe are not appropriate for your purchase. - Attempts to upsell vehicle features and services, such as clear coating, fabric treatment, window tinting, audio-video upgrades, and service agreements. - Efforts to inflate the loan interest rate or lengthen the term of the loan. - Not informing you of dealer rebates or price-matching offers.

Comparing Used Vehicles

The average used car costs about $10,000 less than the average new car. Common sources of used cars include: - New car dealers offer later-model vehicles and may include a warranty. Prices will be higher than at other sources. - Used-car dealers usually have older vehicles. Warranties, if offered, will be limited. Prices are usually lower than at new-car dealers. - Individuals selling their own cars can create a bargain purchase opportunity if the vehicle was well-maintained. Since few regulations apply to private-party sales, caution is suggested. - Auctions and dealers sell automobiles previously owned by businesses, auto rental companies, and government agencies. - Banks, credit unions, and other financing organizations have repossessed vehicles for sale. - Used-car superstores, such as CarMax, offer a large inventory of previously owned vehicles, often with the convenience of online sales.

Research-Based Buying

Phase 1: Pre-shopping Activities Phase 2: Evaluating Alternatives. With every decision, consider various options: - attribute assessment with a comparison of product features. - price analysis including consideration of the costs at various buying locations. - comparison shopping activities to evaluate shopping locations. Phase 3: Selection and Purchase When making your final choice, actions may include: - negotiation activities to obtain lower price or added quality - payment alternatives including use of cash and various credit plans - assessment of acquisition and installation that might be encountered Phase 4: Post-purchase Activities After making a purchase, several actions are encouraged: - proper maintenance and operation - identification and comparison of after-sale service alternatives - resolution of any purchase concerns that may occur

Leasing A Motor Vehicle

Leasing offers several advantages: (1) Only a small cash outflow may be required for the security deposit, whereas buying can require a large down payment; (2) monthly lease payments are usually lower than monthly financing payments; (3) the lease agreement provides detailed records for business purposes; and (4) you are usually able to obtain a more expensive vehicle. Leasing also has drawbacks: (1) You have no ownership interest in the vehicle; (2) you must meet requirements similar to qualifying for credit; and (3) additional costs may be incurred for extra mileage, certain repairs, turning the car in early, or even moving to another state. Be sure you know the true cost, including: 1. The capitalized cost, which is the price of the vehicle. The average car buyer pays about 92 percent of the list price for a vehicle; the average leasing arrangement has a capitalized cost of 96 percent of the list price. 2. The money factor, which is the interest rate being paid on the capitalized cost. 3. The payment schedule, which is the amount paid monthly and the number of payments. 4. The residual value, or the expected value of the vehicle at the end of the lease. After the final payment, you may return, keep, or sell the vehicle. If the current market value is greater than the residual value, you may be able to sell it for a profit. However, if the residual value is more than the market value (which is the typical case), returning the vehicle to the leasing company is usually the best decision.

Phase 2: Evaluating Alternatives

Many people view comparison shopping as a waste of time. Although this may be true in some situations, comparison shopping can be beneficial when (1) buying expensive or complex items; (2) buying items that you purchase often; (3) shopping can be done easily, such as with ads, catalogs, or online; (4) different sellers offer different prices and services; and (5) product quality or prices vary greatly. Caution! To avoid scams of online used-car sellers: - Research the seller's reputation and background. - Do a title check to confirm the seller's name and to make sure the car is not stolen; the "seller" may not actually own the vehicle being sold. - 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're not allowed to have a mechanic inspect it.

Step 3: Consumer Agency Assistance

Mediation involves the use of a third party to settle grievances. An impartial person- the mediator- tries to resolve a conflict between a customer and a business through discussion and negotiation. Mediation is a nonbinding process. This action can save time and money compared to other dispute settlement methods. CAUTION! The Federal Trade Commission warns students of these scholarship and financial aid scams. "The scholarship is guaranteed," "You can't get this information anywhere else," "I just need your credit card or bank account number to hold this scholarship - or "You're a finalist" in a contest you never entered. Also beware of offers for student loan forgiveness and requests for your username and password to help repay loans. Arbitration is the settlement of a difference by a third party- the arbitrator- whose decision is legally binding. After both sides agree to arbitration, each party presents its case. Arbitrators are selected from volunteers trained for this purpose. Most major automobile manufacturers and many industry organizations have arbitration programs to resolve consumer complaints.

Selecting Vehicle Options

Optional equipment for cars may be viewed in three categories: (1) mechanical devices to improve performance, such as power steering, power brakes, and cruise control; (2) convenience options, including power seats, air conditioning, audio systems, power locks, rear window defoggers, and tinted glass; and (3) aesthetic features that add to the vehicle's visual appeal, such as metallic paint, special trim, and upholstery. High-tech safety features help to avoid crashes. Forward-collision warning (FCW) systems alert drivers of a potential crash. Automatic emergency braking (AEB) senses a collision and begins braking. Blind-spot warning (BSW) reminds drivers of vehicles not in their vision line. Adaptive cruise control (ACC) adjusts speed based on traffic. Lane-keeping assist (LKA) and lane-departure warning (LDW) offer warnings when drifting. Vehicle features for older drivers and others include larger mirrors, swivel-seat cushions, pedal extenders, and left-foot accelerators. The Figure It Out! feature covers the net present value of buying a hybrid car. Figure It Out! Net Present Value of a Consumer Purchase: Is a Hybrid Car Worth the Cost? The time value of money may be used to evaluate the financial benefits of a consumer purchase. For example, when deciding to buy a hybrid car, the money saved on gas would be considered a cash inflow (since money not going out is like money coming in). The cost difference between a hybrid and a fuel-version wehicle would be the current cash outflow. If the car has an expected life of eight years, the net present value calculations might be as shown here: Step 1: Estimate the annual savings on gas (for example, 8,000 miles at $3 a gallon), with a vehicle getting 50 miles per gallon rather than 25 miles per gallon. Step 2: Calculate the present value (PV) of a series using either the time value of money tables or a financial calculator. Assume a 2 percent interest rate, eight years. Step 3: Subtract the difference in cost of hybrid car compared with a gasoline-powered car. This analysis for buying a hybrid car (or electric vehicle) will vary based on other factors, such as vehicle maintenance costs, miles driven per year, and gas prices. Hybrid car cost calculators are also available online. Remember that this decision will also be influenced by personal attitudes and social factors. This calculation format may be used to assess the financial benefits of other consumer purchases by comparing the present value of the cost savings over time with the price of the item.


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