personal family finance exam 2

13.5% of Americans

adjust their spending the following month to get their finances back on track

Major Forces in our economy=

advertising and easy money, consumer credit and consumer spending trends

capital=

borrower's assets or net worth

Good Debt

buying a home, transportations for your job

You must earn a rate higher than

inflation to increase buying power

consumer credit payments should NOT

exceed 20% of your net income (it's the max, 15% or less is much better)

MM(money market) Accts at banks are

insured

Personal bankruptcy

is a procedure to distribute some or all of your assets among creditors

Savings =

key to everything; provides safe storage of funds for future use, commonly referred to as time deposits. -examples are: money in savings accounts and certificates of deposits

Other legal alternatives =

legal aid society Prepaid legal services

Resolving Consumer Complaints Step 2

*Communication with the company* "Contact Us" on firm's website Use e-mail or letter

Types of Financial Services- *Mortgage companies* provide

loans for home purchases

Lowballing =

low price quote increases with last minute add-ons

Check-cashing outlets =

places you do not have to have an account at to cash a check AKA: *Currency exchanges* -Charge 1-20 % of check's face value -1-3% is average

U.S. Savings Bonds: Series EE =

"Patriot Bonds" Sold at half of face value Face values $50 - $5,000 Fixed-rate interest compounded semiannually Penalty if redeemed within 5 years Continues earning interest for 30 years Potential tax advantages if used to pay tuition

Smart Cards =

"*Digital wallets*" similar to other ATM cards with an embedded microchip (may store past purchases, insurance info, and medical history)

Stored-Value cards =

"*Prepaid debit cards*" for telephone, transit fares, highway tolls, laundry service, school lunch, etc. some are disposable; some can be reloaded

Annual percentage yield (APY) =

(1 + interest rate) x years - 1 the percentage rate expressing the total amount of interest that would be received on a $100 deposit based on the annual rate & frequency of compounding for a 365-day period. It reflects the amount of interest a saver should expect to earn.

2nd biggest percentage is

(30%) how much you owe, use auto drafts to pay minimum and never be late again

data from your credit report is grouped into 5 categories, the biggest percentage =

(35%) paying on time, your payment history

Types of Financial Services- *Asset management account* =

(Also called a *cash management accoun*t) -All-in-one account, *automatically manages your balances* -Offered by investment companies and others to provide a complete line of financial services program, which include: savings, checking, borrowing, investing, and other financial services for *a single fee*

Medium-priced loans =

(loans w moderate interest) Commercial banks, savings and loan associations, and credit unions

to be wise... set up

*0% interest one month shy of contract end date* -they do this on housing and flooring, you want to be in the 20% that say they'll accept it and be smart about it

Annual % rate can be as high as

*780%* Outlawed in Arkansas! THE worst (payday loan stored)

The Truth in Savings Act requires

*APY (annual percentage yield) be disclosed on savings account plans* (as well as fees on deposit accounts, the interest rate, and other terms & conditions)

Brokerage firms =

*Act as agent for buyers and sellers of financial products* (stocks, bonds, & other investment securities like checking accounts and online banking)... these companies obtain their earnings from commissions & fees

Resolving Consumer Complaints Step 3

*Consumer agency assistance* -BBB provides pre-purchase information -File a complaint online at http://www.bbb.org -Mediation - third party negotiates (nonbinding) -Arbitration - decision is legally binding -State consumer protection office or agency

Service Contracts (warranties) =

*Extended warranty*, not a warranty but an agreement between a business and a consumer to cover the repair costs of a product, may not be wise because of costs and exclusions

Debit Card Transactions=

*Immediate account debit* use to limit spending to available money, avoid bills that will be paid in the future, avoid interest payment or annual fee, and to obtain a better protection if you process a transaction as a credit card

Resolving Consumer Complaints Step 1

*Initial communication* Calm, rational, persistent approach; *most consumer complaints are resolved here* at the original sales location

Effects of Bankruptcy

*Obtaining credit may be more difficult* But, creditors may consider the inability to file bankruptcy again for 8 years

Close-End Credit =

*One-time loans for a specific purpose and a specific amount paid back in a specified period of time and payments of equal amounts* (example auto loan, mortgage, or installment loans like appliance or furniture payment contracts) *you can't add to it*

Line of Credit

*The maximum dollar amount of credit, which may or may not be borrowed, that the lender has made available to a borrower* (credit cards) -Don't max it! -Spend 30-50% of it. -most cards have an over the limit fee (like $35) -Then you bring your credit score way down

Certificates of deposit (CD)

*a savings plan requiring that a certain amount be left on deposit for a stated time period to earn a specified interest rate* -Required minimum deposit -Required time on deposit -Penalties for early withdrawal -Take care when rolling over -Various CD types*

Invoice price (of a new car) =

*dealer's cost* (an amount less than the sticker price) -Consumer Reports: http://www.consumerreports.org -Edmund's New Car Prices: http://www.edmunds.com

Financial Aspects of Leasing *Residual Value* =

*expected value of the vehicle at the end of the lease* -Return, keep, or sell the vehicle. -If the residual value is more than the market value, return it

Consumer Financial Protection Bureau (CFPB)

*for Credit card issues* go to the site, its a one-stop complaint website https://help.consumerfinance.gov/app/ask_cc_complaint

Co-Signing a Loan

*means guaranteeing the debt* (you agree to be responsible for loan payments if the other party fails to pay) Lender would not require a co-signer if borrower were a good risk

Commercial Bank

*offer a full range of financial services, including*... Checking Savings Lending Other (types are national banks, regional banks, community banks, and online-only banks)

Prepaid Debit Cards:

*pay before* you use ("loading" [adding funds to] by cash, check, direct deposit, online transfer, smartphone check photo, or credit card cash advance)

Debit Card: (or cash cards)

*pay now* - Deducts money immediately from your account and your own funds, report fraud within 60 days to not be liable for use

Financial Aspects of Leasing *Capitalized cost* =

*price of the vehicle* -Average buyer pays 92% of list price -Average leaser pays capitalized cost of 96% of list price

Sticker price (of a new car) =

*suggested retail price* Includes base price + accessories

Resolving Consumer Complaints Step 4

*take legal action* -Small claims court -Class action suits -Using a lawyer

or for your credit report,

877-322-8228 can call

Money market fund=

-*Combination savings and investment plan* offered by investment companies with earnings based on investments in various short-term financial instruments *invest mainly in short-term government and corporate securities* -NOT covered by FDIC

What to Do If Your Identity is Stolen

-*Contact the three major credit bureaus* Ask the fraud department to institute a fraud alert & Request that creditors call you for permission before opening any new accounts in your name -*Contact creditors* Check for any accounts that have been tampered with or opened fraudulently -*File a police report* Keep a copy

Life insurance companies =

-*Insurance plus savings and investments*, provide financial security for dependents with various life insurance policies -Some offer financial planning and investing services

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

-*Makes it more difficult for consumers to file a Chapter 7 bankruptcy* -Forces a Chapter 13 repayment plan -Debtors *must wait 8 years* from their last bankruptcy *to file again* -Clamps down on "bankruptcy mills" that seek to game the system -Includes provisions for consumer education on debt management and financial planning -*8 years*!!!

Credit Help: CCCS (Consumer Credit Counseling Services)

-Aids families with serious debt problems by helping them manage money better and set up a realistic budget -Can negotiate reduced interest rates and a repayment plan -May also find help from Extension agents(universities or credit unions); military bases, federal housing authorities

Buying a Motor Vehicle Phase 4 - Post-Purchase Activities *vehicle Servicing Options*

-Car dealers -Service stations -Independent Auto Repair Shops -Mass Merchandise -Retailers like Sears and Wal-Mart -Specialty shops such as oil/lube, muffler, transmission, and tire shops -Be alert for signs of fraud

Your Rights Under Consumer Credit Laws

-Complain to the creditor -File a complaint with the government If all else fails, sue the creditor

Advantages of Credit

-Current use of goods and services -Permits purchase even when funds are low -A cushion for financial emergencies -Advance notice of sales -Easier to return merchandise -Convenient when shopping (online) -Provides a record of expenses

*Chapter 13 Bankruptcy

-Debtor with regular income proposes a plan for using future earnings or assets to eliminate debts over time -Information provided to the court the same as under Chapter 7 -*Plan may last up to five years* -normally keeps property -Debtor *makes payments to a court-appointed trustee who then distributes money to creditors* -*Stays on credit report for 10 years*

Fixed Costs=

-Depreciation -Interest on loan -Insurance -License, registration and taxes

Comparing Financial Institutions

-Determine the financial services you need before choosing a financial institution -Compare fees and *convenience* -Consider the safety and rates for deposits and loans at different institutions

Price Bargaining for New Cars--- Until price of the new car is settled

-Don't mention any trade-in -Don't mention dealer financing

3 major Credit report Bureaus

-Equifax -Experian -TransUnion You receive one free report a year from each of the 3 bureaus, they are agencies that collect information on how promptly people and businesses pay their bills

U.S. Savings Bonds *Treasury Direct*

-Establish an account at www.treasurydirect.gov -24/7 access to buy, manage, and redeem series EE and I electronic savings bonds

Used Car Warranties

-FTC (Federal Trade Commission) required "*buyers' guide sticker*" for used cars telling whether the vehicle comes with a warranty and if so, what protection the dealer will provide -Warranty of merchantability

Variable costs=

-Gas and oil -Tires -Maintenance and repairs -Parking and tolls

ECOA (Equal Credit Opportunity Act)

-Gives all applicants the same rights -*Credit providers may NOT discriminate based on*: Race or nationality (prohibits redlining: not discriminating against your neighborhood or people you live around) Age Social Security or public assistance Sex Marital status

Your Credit Score Determines:

-If you get a loan -Interest charged (depends on your score) -Whether you can rent -Whether you're hired -Insurance premiums (only 3 states that have outlawed this, if you finish school and move to a big city and you don't have a good credit score, it can double) -Cable bill (they can increase your bills bc of your credit score) -Phone bill

When evaluating alternatives

-Is it possible to delay the purchase or do without the item? -Should I pay for the item with cash or credit? -Which brands should I consider? -How do the price, quality, and service compare at different stores?

Phase 4: Post-Purchase Activities *Motor Vehicle Maintenance* =

-Keep good expense records -At least follow the maintenance schedule in the manual (More frequent intervals may minimize major repairs)

Pawnshops =

-Loans based on value of possessions (jewelry) -Higher fees; 3% interest charged per month -common -Used for quick cash

Buying a Motor Vehicle Phase 4: *Post-Purchase Activities*

-Maintenance and ownership costs are associated with most major purchases -Correct use yields improved performance and fewer repairs -Investigate, evaluate and negotiate a variety of servicing options -Complain if not satisfied with a purchase

Finance companies =

-Make short and medium term loans to consumers -Higher rates

Financial Aspects of Leasing *Payment Schedule* =

-Monthly payment amount -number of payments

when comparing prices, remember

-More store convenience (location, hours, sales staff) -> higher prices -Ready-to-use products -> higher prices -Large is not always the best buy - check unit prices -"Sale" prices not always a savings -Online sources can save time

Vantage Score

-New scoring technique -Developed collaboratively by 3 credit agencies, as long as the three have the same info ab your credit history, you will receive the same score from all of them -Range = 501 to 990 (higher = less risk)

Buying a vehicle *Leasing Disadvantages*

-No ownership interest -Must meet requirements -May have additional costs for extra mileage, turning the car in early, or for certain repairs

Travel and Entertainment (T&E) Cards

-Not really "credit cards"; balance is due in full each month -most people think of these such as Diners Club; American Express as credit cards because you don't pay for services or goods at the time you purchase them

Fair Credit Billing Act (FCBA, 1975)*(not very important)

-Notify creditor of error in writing within 60 days -Pay the portion of the bill not in dispute -Creditor must respond within 30 days -Can withhold payment on damaged or shoddy goods or poor services if purchased with a credit card -Credit card company has two billing periods but no longer than 90 days to correct your account or tell you why they think the bill is correct

Advantages of Credit (more)

-One monthly payment -Safer than carrying cash -Needed for hotel reservations, car rentals, and shopping online -Take advantage of float time/grace period -Rebates, airline miles, or other bonuses -Credit indicates financial stability

your Credit Report

-Only authorized persons can obtain for business reasons -7 year limit on adverse data but 10 years for filing personal bankruptcy -Free copy if denied credit -They must clear up misinformation in 90 days

Annual Percentage Rate (APR)

-Percentage cost of credit on a yearly basis -Key to comparing costs when shopping for rates

Buying a Motor Vehicle Phase 2 - *Evaluating Alternatives*

-Purchase alternatives -Selecting vehicle options -Comparing used vehicles -Leasing a motor vehicle: (At the end of the lease, you have no ownership interest in the vehicle.)

U.S. Savings Bonds *Registration* (3 ways)

-Single owner -Co-owners with a primary owner -With a beneficiary who takes ownership of the bond when the original owner dies

Buying a vehicle *Leasing Advantages*

-Small cash outflow -Lower monthly payments than buying -Lease provides detailed records - helps if you use your car for business purposes -Able to obtain a more expensive car more often

Chapter 7 Bankruptcy

-Submit a petition to the court that lists assets and liabilities, and pay a filing fee -Many, but not all, debts are forgiven -Assets sold to pay creditors -Can keep some assets (home, vehicle,..) -No longer owe credit cards, unsecured loans, unpaid medical bills -May still owe taxes, child support, alimony, educational loans, and debts from willful or malicious acts -Stays on credit report for 10 years.

Practical Purchasing Strategies for wise buying (*CH 6*)

-Timing purchases -Purchase location -Brand comparison -Label information -Price comparison

Finance Charge

-Total dollar amount you pay to use credit -Includes interest costs and fees, such as service charges, credit-related insurance premiums, or appraisal fees

Consumer protection for new-car buyers

-Warranties -State lemon laws - www.lemonlawamerica.com

FICO credit score

-generally between 350 to 850** REMEMBER - that rates how risky a borrower is -Higher score = less risk (you pose to creditors) -Available from www.myfico.com for a fee (calculated from the information in your credit report)

Extend Vehicle Life with Proper Maintenance (areas to consider)

-get regular oil changes every 3 months or 3,000 miles -check fluids (brake, power, steering, transmission) -inspect hoses and belts for wear -get a tune-up 12,000-15,000 miles -check and clean battery cables and terminals -check spark plug wires after 50,000 miles -flush radiator and service transmission every 25,000 miles -keep lights, turn signals, and horn in good working condition -check muffler and exhaust pipes -check tires for wear; rotate every 7,500 miles -check condition of brakes

Common Automobile Repair Frauds

-when checking the oil, the attendant puts the dipstick only partway down and then shows you that you need oil -an attendant cuts a fan belt or punctures a hose (watch when someone checks under your hood) -a garage employee puts some liquid on your battery and then tries to convince you that it is leaking and you need a new battery -removing air from a tire instead of adding air to it can make an unwary driver open to buying a new tire or paying for an unneeded patch -putting grease near a shock absorber or on the ground and then tells you your present shocks are dangerous and you need new ones -you're charged for two gallons of antifreeze with a radiator flush when only one gallon was put in

Buying a Motor Vehicle Phase 1 - *Pre-shopping Activities*

1. *Problem Identification* -Focus purchasing activities, have an open mind 2. *Information Gathering* -Personal contacts -Business organizations -Media information -Independent testing organizations -Government agencies -Online sources

Home Equity Loans (HELOC)

1. Based on equity paid into home (home equity)- the difference between the current market value of your home and the amount you still owe on the mortgage.... Interest is tax deductible 2. Best used for *home improvements or education, or for a car* (buy car and get deduction you're earning on your interest for that) - X=Miss a payment and lose your house=X

Personal Consumer Protection (5 suggestions to prevent being taken by deceptive business practices)

1. Do business only with reputable companies 2. Avoid signing contracts you do not understand 3. If it seems too good to be true, it probably is 4. Compare the cost of using credit vs. cash 5. Avoid rushing to a good deal (impulse buying)

Basic questions to ask before choosing a financial institution

1. How can I minimize my costs for financial services? 2. Where can I get the best return on my savings? 3. Will I be able to borrow money if I need it?

Most consumer problems can be resolved by following these steps:

1. Initial communication 2. Communication with the company 3. Consumer agency assistance 4. Legal action

Buying a Motor Vehicle Phase 3 - *Determining Purchase Price*

1. Negotiation may lower price or add features -Have all the necessary information -Deal with a person who has the authority to give you a lower price or additional features 2. Used-Car Price Negotiation -Edmund's Used Car Prices - http://www.edmunds.com -Kelly Blue Book - http://www.kbb.com

approach to consumer *motor vehicle* buying involves 4 phases:

1. Pre-shopping activities, such as problem identification and information gathering 2.Evaluating alternatives 3. Determining the purchase price 4. Post-purchase activities, such as proper operation and maintenance

New Car Warranties (3 main conditions)

1. coverage of the basic parts against defects 2. Power train coverage (for engine, transmission, and drive train) 3. Corrosion warranty (HOLES due to rust) (provide buyers with an assurance of quality and vary in time, mileage, and parts they cover)

U.S. Bankruptcy Act of 1978

2 choices, neither are desirable 1. Chapter 7 = straight bankruptcy 2. Chapter 13 = wage earner plan

poor credit score is

619 or lower

fair credit score is

660 - 719

average US credit score is

678

when comparing financial alternatives buying a car *Check the*

APR and any rebates

your credit report site =

AnnualCreditReport.com (NOT freecreditreport.com)

Lemon laws allows refund if:

Applies to vehicles that have been serviced 4 times to correct the same problem in the first 12,000 miles

You qualify as a UCA student to become a member of the

Arkansas Federal Credit Union

loans =

Borrowing money with an agreement to repay along with interest within a certain amount of time

Other Payment Methods=

Certified check, Cashier's Check, Money order, & Traveler's check

Credit could be easier for

Chapter 13 filers who have repaid some debt versus Chapter 7 filers who made no effort to repay

Cashier's Check =

Check from a financial institution; you pay the face amount, plus a fee

Two Basic Types of Consumer Credit

Close-End Credit & Open-End Credit

Sources of Consumer Credit

Commercial Banks, Consumer finance companies, Credit Unions, Life Insurance companies, and federal savings banks (savings and loan associations)

Electronic Payment Methods

Debit card transactions, online payments, Stored Value cards, Smart cards, Peer-to-peer payments

General Rules of Credit Capacity

Debt Payments-to-Income Ratio= divide monthly debt payments (not including house payment, which is a long-term liability) / by net monthly income

Phase 4: Post-Purchase Activities *Automobile Operation Costs* =

Fixed Costs & Variable Costs

Stored-Value cards

Gift cards Prepaid cards -provide immediate money

Can you afford it if the borrower defaults?

If borrower doesn't pay, cosigner is liable for the full amount plus any late or collection fees If payment is missed, creditor can collect from the cosigner first

Financial Aspects of Leasing *Money factor* =

Interest rate (being paid on the capitalized cost)

Rent-to-Own Centers =

Lease merchandise at high interest rates to low-income customers

(types of financial institutions) *Non-Deposit Institutions* that offer various financial services, include

Life insurance companies & Investment companies (mutual funds) & Brokerage firms & Credit card companies & Finance companies & Mortgage companies

Sources of Consumer Credit *loans*

Loans, Inexpensive loans, Medium-priced loans, expensive loans

Purchase location =

Location, price, selection, services available (expanded shopping environment = greater choice, potentially lower prices)

Sales Techniques to Avoid when price bargaining for new cars

Lowballing, highballing, the question "How much can you afford per month?," Never leave a deposit unless ready to buy, unrealistic statements like "Your price is only $100 above our cost," & Sales agreements with preprinted amounts

Investment companies (also called mutual funds) & insurance companies offer a

Money market fund

Buying a Motor Vehicle Comparing Used Vehicles *Common sources of used cars include*

New-car dealers Used-car dealers Private sales Auctions and dealers sell previously owned cars Used-car superstores such as CarMax CPO = Certified Pre-Owned www.dealernet.com

Buying a Motor Vehicle Purchase Alternatives

Now or later? Cash or credit? Which brands? Which stores? Rent vs. Buy?

Label information =

Open Dating: the freshness or shelf life of a perishable product, usually relate to quality not safety

Inexpensive loans =

Parents or family members

Problematic Financial Businesses

Pawnshops, Check-cashing outlets, Payday loan companies, Rent-to-Own Centers, and Car Title Loans

Online Payments =

PayPal, MyCheckFree

Certified check =

Personal check with guaranteed payment

Smart Cards

Plastic card equipped with a computer chip that can store 500 times as much data as a normal credit card (can combine credit card balances, driver's license, health care identification, medical history, and other info) - can be used to buy an airline ticket, store it digitally, and track frequent flyer miles

timing purchases =

Price variations with the time of the year (certain items go on sale at certain times each year)

Potential drawbacks of Mobile Banking

Privacy Security of data Fees (costly)

Brand comparison =

Private-label or store brands that cost less VS. national brands

the Fair Debt Collection Practices Act (FDCPA) =

Prohibits certain practices by debt collectors (businesses that collect debts for creditors) & Does not eliminate legitimate debts that consumers owe

Mortgage Companies =

Provide home mortgage loans

Money order =

Purchase at financial institution, post office, store

Various CD types (certificates of deposit) =

Rising-rate or bump-up Liquid Zero-coupon Indexed Callable Promotional (beware of these)

FDIC

Savings: safe, insured, liquid *$250,000 guaranteed back if bank crashes* Low rate of return, but you have it & it's safe

PRBC = Payment Reporting Builds Credit

Some people just don't want a credit card, or have very little recorded credit, but do build it, you can sign onto these and they will take stuff like rent, etc. that are typically not included on a traditional credit report to build your credit and rating

Credit card companies =

Specialize in funding short term loans (retail lending)

Mobile Banking (3 access methods)

Text banking Mobile web banking Banking apps

Managing Your Debts: Debt Collection Practices

The Federal Trade Commission enforces the *Fair Debt Collection Practices Act* (FDCPA)

Thomas Jefferson's Monticello:

The co-signer or borrower is responsible for the loan repayment

Open-End Credit =

Use as needed until line of credit max reached (example: credit cards, travel and entertainment, or overdraft protection)

*Collateral*

Use of property or savings to secure a loan *a valuable asset that is pledged to ensure loan payments* (gold or silver rings, luxury watch, car, farm machinery)

The Five C's of Credit questions to ask

Will you repay the loan? Can you repay the loan? What is your net worth? What if you don't repay? What if your job is insecure?

Warranties

Written guarantee from manufacturer or distributor specifying the conditions under which the product can be returned, replaced, or repaired

rebate =

a partial refund of the price of a product

money market funds=

a product of investment and insurance companies, *invest mainly in short-term government and corporate securities*, however, are usually quite safe

Money Market accounts=

a savings account *offered by banks, savings & loan associations, and credit unions* that* requires a minimum balance* and has *earnings based on the changing market level of interest rates* -used as a means for borrowing and lending in the short term -insured by gov. offered at most depository institutions

Traveler's check=

allow you to make payments when you are away from home -Sign each check twice -Electronic traveler's checks - prepaid travel card with ability to get local currency at an ATM from other nations

Payday loan companies =

also called Cash advances, Check advance loans, Postdated check loans, or Delayed deposit loans -High interest rates: 780%+ *know all names*

52% of Americans

are spending more than they earn, out of watch

Best rates and calculators: GO-TO website to find about savings=

bankrate.com (comprehensive. objective. free)

*Financing sources* when comparing financial alternatives buying a car

banks, credit unions, other financial institutions, finance companies, or dealer financing -Get preapproved for a certain loan amount

ex of prepaid card =

bluebird through walmart

Celebrity (oops) Prepaid Cards

cards haven't worked bc of the fees that apply. you can compare these at www.nerdwallet.com/prepaid

The Five C's of Credit

character, capacity, capital, collateral, conditions

Price bargaining -

compare dealers - Set-price dealers (use no-haggling car selling with the prices presented to be accepted or rejected)

*Low payment or low rate ≠ best credit plan* when comparing financial alternatives

consider loan length, bc of Upside down equity = car is worth less than amount still owed on the loan (negative equity)

Credit-Like Cards

debit cards, stored value cards, Smart Cards, Travel and Entertainment (T&E) Cards, and Smartphones

Compounding=

earning interest on previously earned interest

expensive loans =

easiest but most expensive w high interest rates, ranging from 12 to 25% -Finance and check cashing companies -Retailers such as car or appliance dealers -Bank credit cards and cash advances

debit cards

electronically subtract money from your savings or checking accounts -Most commonly used at ATMs

good/excellent credit scores

good = 720 - 749 excellent = 750 +

Attorney General's Consumer Protection =

gotyourbackarkansas.org

When buying used...

have a trained and trusted mechanic check out the vehicle.

Arkansas Federal Credit Union

have less overhead, less laws to go by; will give you more interest on your savings... ***They always give a little bit more and charge a little bit less

Warranty of Merchantability for used cars

means the product is guaranteed to do what it is supposed to do (used car is guaranteed to run- at least for a while!)

MM Funds at Investment Banking Firms are

not insured

U.S. Consumer Bankruptcy Filings

number reduced after the Bankruptcy Abuse Prevention and Consumer Protection Act was passed, but poor economic conditions have caused an increase again

Car buying services =

or *auto broker* businesses that help buyers obtain a specific new car at a reasonable price; provide options for prices ranging between *$50 - $200 over dealer's cost*

Negative Equity

owing more than the car is worth, also called being "upside down"

Credit Card:

pay later

Although family and friends are the least expensive loan sources;

protect yourself and your friendship by writing it down and clearly understanding the terms -have a clear understanding

Price comparison *Coupons and rebates*

provide better pricing for wise customers

21% of Americans

regularly have monthly expenses in excess of their income

It is important to

shop for credit and compare credit prices (you can do this if you know the finance charge and the annual percentage cate)

bad debt

slavery of the free, when you start using your credit card for personal stuff like food, etc.

Smart Phones=

some phones are now equipped to make purchases, called mobile commerce, where they provide stickers attached to phones that will allow the customer to scan the code

Sales agreement =

specific details

Price comparison -Unit pricing =

standard unit of measurement to compare the prices of packages of different sizes (divide price of item by units [lbs., oz., etc] then compare to various sizes, brands, or stores)

Disadvantage: of credit

temptation to overspend

Liquidity

the ability to withdraw money quickly without losing value

dealing with reputable businesses and a basic knowledge of your automobile are

the best methods of avoiding deceptive repair practices

character=

the borrower's attitude toward his or her credit obligations

capacity =

the borrower's financial ability to meet credit obligations- affected by income and debts you already have- it's your ability to pay additional debts

conditions =

the general *economic conditions* that can affect a borrower's ability to repay a loan

Bankruptcy should be

the last resort, because of the damage to your credit rating. It stays on credit report for 10 years.

The more new cars sold,

the more used cars there are for sale, keeping the prices down

interest is

the periodic charge for the use of credit (the money you will pay for the charge of interest when you buy something)

the difference between the sticker price and the dealer's cost is

the range available for negotiation (range is larger for full-size luxury cars)

CreditKarma.com & Credit.com; Quizzle.com *Free Score Estimates*

they tell you why you have a poor credit score -both sites will give you those 3 digit numbers

Credit Unions:

user-owned, nonprofit; lower fees and higher satisfaction. Insured through NCUA

Highballing =

when offered a high amount for trade-in + high new car price

Online Banks will

will give you the BEST returns

U.S. Savings Bonds see this website

www.savingsbonds.gov ,for rates