Personal Finance Chapter 4

Purchasing Strategies: Price Comparison

Unit pricing: uses standard unit of measurement to compare the prices of packages of different sizes (price of the item/ number of units of measurement)

Small claims court

a person may file a claim involving amounts below a set dollar limit

Warranty

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

Service Contract

an agreement between a business and a consumer to cover the repair costs of a product -although they are often referred to extended warranties, they are not warranties. For a fee, they insure the buyer against losses due to the cost of certain repairs

Arbitration

the settlement of a difference by a third-party (the arbitrator) whose decision is legally binding

Mediation

the use of a third party to settle grievances

Impulse buying

unplanned purchasing, which can result in financial problems

Research-Based Buying: 3. Determining Purchase Price

-Used car price negotiation (Edmund's Used Car Prices/ Kelley Blue Book) -Price Bargaining for new cars (Car-buying services / auto brokers offer desired models with options for prices ranging between $50-$200 over the dealer's cost)

Research-Based Buying: 1. Preshopping activities

-problem identification to set a goal and focus your purchasing activities -Info gathering to benefit from the buying experienes of others

Research-Based Buying: 4. Postpurchase Activities

1. Automobile operation costs: Fixed ownership costs & Variable operating costs 2. Motor Vehicle Maintenance 3. Automobile Servicing Sources

Research- Based Buying

1. Preshopping activities 2. Evaluating alternatives 3. Selection and Purchase 4. Postpurchase

Research-Based Buying: 2. Evaluating Alternatives

1. Selecting Vehicle Options -Devices that improve performance or operation -Comfort convenience -Visual appeal options 2. Comparing Used Vehicles -Buy new car at new dealership (there from trade off) -CPO (Certified preowned): nearly new cars that come with the original manufacturer's guarantee of quality 3. Leasing a motor vehicle -A contractual agreement with monthly payments for the use of an automobile over a set time period

Purchasing Strategies: Timing Purchases

Certain items go on sale the same time each year -buying winter clothes in mid or late summer -buying holiday items and other products at reduced prices in late December and early January

Purchasing Strategies: Label Information

Federal law requires that food labels contain certain information -Open dating: describes the freshness or shelf life of a perishable product

Purchasing Strategies: Store selection

Location, price, product selection, and services available

Purchasing Strategies: Brand comparison

National brand: products highly advertised items available in many stores Store-brand/ private label: sold by one chain of stores, are low-cost alternatives to famous-name products

New-Car Warranties

Provide buyers with an assurance of quality Conditions: 1. Coverage of basic parts against defects 2. Power train coverage for the engine, transmission, and drive train 3. The corrosion warranty, which usually applies only to holes due to rust, not to surface rust

Resolving Consumer Complaints

Step 1: Return to the place of purchase Step 2: Contact the company headquarters Step 3: Obtain consumer agency assistance Step 4: Take legal action

Used-Car Warranty

The Federal Trade Commission (FTC) requires used cars to have a buyer's guide sticker telling whether the vehicle comes with a warranty and, if so, what protection the dealer will provide

Implied warranty

covers a product's intended use or other basic understandings that are not in writing -Warranty of title: indicates that the seller has the right to sell the product -Warranty of merchantability: guarantees that the product is fit for the ordinary uses for which it is intended

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

What are the common sources of lawyer referrals?

friends, advertisements, and local division of the American Bar Association

Class-action suit

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

Legal aid society

one of a network of publicly supported community law offices that provide this assistance at a minimal cost or without charge

Full warranty

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