BUS 201 Chapter 8 Consumer Purchasing Strategies and Legal Protection

Average used car costs $__,___ less than a new car.

$19,000

Cooperative

a nonprofit organization; members save money.

warranty

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

Certified preowned (C P O) vehicles

are nearly new cars with original manufacturers' guarantee of quality.

What does CPO vehicles stand for?

certified preowned vehicles

comparison shopping

comparing products and prices in different stores before making a purchase

Daily buying decisions involve a trade-off between _________ _________ and _______ for the future.

current spending; saving

Used-Car Warranties

disclosures must describe warranty, if any otherwise car sold "as is"

Implied Warranty Of Merchantability

guarantees the product is fit for its ordinary use.

Full or limited express warranties, are usually ________.

written

Timing purchase

Be aware if the price varies with the time of the year.

Consumer agency assistance.

Better Business Bureau. which can used as mediation using a third party to negotiate (nonbinding). or arbitration using a third party to make the decision (binding). with Federal and State government agencies.

Class-action suits.

Legal action taken by a few individuals on behalf of a group.

Small claims court.

Settles legal differences involving amounts below a set limit.

Brand comparison

Store-brand and private-label (low-cost alternatives to brand-name products) and national-brand (highly advertised) products.

Leasing

a contract to use an automobile for a monthly payment.

3 vehicle options

1) mechanical devices 2) convenience options 3) aesthetic features.

3 Post-Purchase Costs for Cars

1. Automobile operation costs. 2. Motor Vehicle Maintenance. 3. Automobile servicing sources.

2 details of label information

1. Information on label can be helpful or just advertising. 2. Federal law requires labels on food. such as open dating describes the freshness or shelf life of perishable products.

4 Steps in Resolving Consumer Complaints

1. Initial Communication 2. Communication with the company or obtain its consumer hotline number by calling 1-800-555-1212. 3. Consumer agency assistance. 4. Legal action.

6 common sources to purchase used cars

1. New car dealers. 2. Used car dealers. 3. Private individuals. 4. Auctions. 5. Used car superstores. 6. Online used car businesses.

4 Leasing Drawbacks.

1. No ownership interest in the vehicle. 2. Need to meet credit requirements to qualify. 3. Possible additional costs like mileage, repairs, etc.

4 Leasing Advantages.

1. Only small cash outflow may be required for security deposit. 2. Monthly lease payments are often lower than financing payments. 3. Lease agreement provides detailed records. 4. Ability to secure a more expensive vehicle.

5 factors of comparison shopping

1. Timing Purchase 2. Purchase location 3. Brand comparison 4. Label comparison 5. Price comparison

3 details of price comparison

1. Unit pricing uses a standard unit of measurement to compare prices of packages of different sizes. 2. Coupons help save money on groceries; rebates are a partial refund of price of products. 3. Convenience and ready-to-use products may mean higher prices; large packages are usually the best buy; "Sale" prices may not always mean saving money.

5 Factors in the Comparing financing alternatives.

1. Variety of lenders and some lenders may pre-approve you for a certain loan amount. 2. Avoid being upside-down or having negative equity in your car. 3. Look for rebates or low-interest financing. 4. Consider the A P R (true cost of credit). 5. Consider credit terms of different lenders.

3 Parts the New-Car Warranties cover

1. basic parts 2. power train 3. corrosion coverage

3 factors that influence your spending, saving, and investing choices.

1. economic 2. social 3. personal factors

7 Personal Factors

1. gender 2. age 3. occupation 4. income 5. education 6. marital status 7. family size.

5 Economic Factors.

1. inflation 2. interest rates 3. tax rates 4. government regulations 5. product safety

7 Social Factors.

1. lifestyle 2. interests 3. hobbies 4. peer group 5. culture 6. advertising 7. media.

2 preshopping activities

1. problem identification 2. information gathering

Purchase of location

Choice of retailer depends on location, price, product selection, and services available.

Used-cars Price Negotiation

Determine fair vehicle price by comparing using sources such as Edmund's Used Car Prices, and the Kelley Blue Book

Personal Consumer Protection.

Do business with reputable companies; Sign contracts you understand; Be cautious of exaggerated offers; Compare buying on credit versus paying cash; Avoid rushing to get a deal.

Implied Warranty Of Title

indicates the seller has the right to sell the product.

Service contracts

known as extended warranties but are not warranties; for a fee they provide coverage for expensive repairs but have exclusions.

4 commonly overlooked trade-offs when buying

1. Paying a higher price over time by using credit to buy items you need now. 2. Buying unknown, possibly poor-quality brands that are less expensive. 3. Ordering online, which saves time and money, may make it difficult to return, replace, or repair purchases. 4. Taking time and effort to comparison-shop to save money and obtain better after-sale service.

6 sources of information for preshopping activities

1. Personal contacts. 2. Business organizations. 3. Media sources (television, websites). 4. Independent testing organizations (Consumer Reports). 5. Government agencies. 6. Online Sources (Autotrader).

4 Phases Major Consumer Purchases: Buying Motor Vehicles

1. Preshopping activities 2. Evaluating Alternatives 3. Determining Purchase Price 4. Post-purchase activities

4 Legal Options for Consumers

1. Small claims court. 2. Class-action suits. 3. Using a lawyer. 4. Other legal alternatives. ex. Legal aid society, Prepaid legal services.

4 Factors in Price Bargaining For New cars

1. Sticker price suggests retail price. 2. Invoice price less than sticker price. 3. Dealer cost. 4. Set-price dealers.

2 things needed to determine purchase prices

1.Know necessary information about the product. 2.Deal with a person of authority to give you a lower price or additional features.