Chapter 6 Personal Finance

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

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

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 is NOT a guideline for avoiding being taken by deceptive business practices?

Do not hesitate to act quickly if a deal seems just too good to pass up

A full warranty covers only certain aspects of the product and requires the buy to share in the cost of repairs or shipping

False

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

One of the factors that influences the price of buying a used car is capitalized cost

False

You should begin the consumer complaint process at the corporate headquarters of the store where the problem began

False

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

A network of community-supported law offices that provide legal assistance to people who cannot afford their own attorney is called:

a legal aid society

The first step in the consumer complaint process is litigation

False

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

Which of the institutions are used for auto loans?

consumer finance companies banks credit unions

The common sources of information regarding products during the pre-shopping phase include personal __________, business organizations, media, and independent testing agencies such as Consumer Reports

contacts

A used car dealer must display a ___________ ___________ sticker telling whether the vehicle comes with a warranty

buyer's guide

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

demand for the model condition features and options number of miles

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

depreciation

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

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

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

express

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

finance

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

finance

A(n) __________ warranty of merchantability 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 depreciation registration fees interest on car loans

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

lemon

The advantage of certified pre-owned vehicles is that:

there is a rigorous inspection and the original manufacturer's guarantee of quality

A person could choose not to participate in a class action suit and instead file an individual lawsuit

true

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

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; owed

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

corrosion coverage for holes due to rust engine, transmission, and drive train basic parts covered against defects

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

Which of the following are examples of groups of people that might qualify for a class-action suit?

Customers overcharge for a service Auto owners charged for unneeded replacement parts for their vehicles People injured by a defective product

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

False

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

sticker; dealer's

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

shipping or repairs

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

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

Brand names are usually

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

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

negotiation activities to obtain a lower price

Which of the following is NOT true concerning small claims court?

you can generally sue for as much as $100,000 in small claims court

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

authority

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

True

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

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

Most consumer complaints are resolved at the original sales location

True

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

The driving costs of an automobile are influenced by the number of miles you drive and the size of the car

True

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

True

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

True

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

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

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

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

advantage

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 are important considerations when choosing a store at which to shop?

selection and services available location and prices

Sources of automobile servicing include:

service stations independent auto repair shops car dealers

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

In ___________, a third party tries to settle a grievance, but the process is non-binding

mediation

When selecting a lawyer, questions about legal costs should focus on the way charges will be calculated, such as __________ fee, ___________ rate, or contingency basis

flat; hourly

Which of the following would be considered wise buying techniques?

comparing brands to determine which is best for your purpose seek coupons and discounts reading and evaluating label information

Which of the following are drawbacks of leasing an automobile?

cost incurred for extra mileage no ownership interest in the vehicle costs incurred for certain repairs

Product label on appliances includes information on operating __________ to assist you in selecting the most energy-efficient models

costs

When considering the purchase of a used car, a road test should consist of:

Listening for smoothness of acceleration and transmission Checking the ease of steering and vehicle control Checking brakes at different speeds

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

price

Most consumer complaints are resolved:

at the original location

The various groups to which special new car rebates are often offered include students, teachers, credit union __________, and real estate __________

members; agents