Chapter 6: Consumer Purchasing Strategies and Wise Buying of Motor Vehicles
Advantages of Leasing
Small cash outflow, lower monthly payments, provides detailed records, able to obtain a more expensive car
Financing resources
Banks, credit unions, other financial institutions, finance companies, or dealer financing
Fixed costs
Depreciation, interest on loan, insurance, license, registration, and taxes
Types of Warranties
Express, extended, implied; used car, new car, service contracts
Sticker price
MSRP
Payment schedule
Monthly payment amount; number of payments
Disadvantages of Leasing
No ownership interest, must meet requirements, may have additional costs
Buying a motor vehicle: pre-shopping activities
Problem identification, info gathering
Practical Purchasing Strategies
Timing purchases, purchase location, brand comparison, label information
Price comparison
Unit pricing, coupons/rebates; more store convenience = higher prices; ready-to-use products = higher prices, "sale" price not always savings
Warranties
Written guarantee from manufacturer/distributor specifying conditions under which the product can be returned, replaced, or repaired
Comparison shopping and Price analysis
can be beneficial
Invoice price
dealer's cost
residual schedule
expected value of the vehicle at the end of the lease
Variable costs
gas and oil, tires, maintenance and repairs, parking and tolls
Money factor
interest rate
Sales techniques to avoid
lowballing, highballing, "how much can you afford a month?", never leave deposit unless ready to buy, sales agreements with preprinted amounts, "your price is only $100 above our cost"
Buying a motor vehicle: purchasing alternatives
now or later?; cash or credit?; which brands?; which stores?; rent vs buy?
Capitalized cost
price of the vehicle
Buying a motor vehicle: evaluating alternatives
purchase alternatives, selecting vehicle options, comparing used vehicles, leasing a motor vehicle
Personal Consumer Protection
Do business only with reputable companies; avoid signing contracts you do not understand; if it seems too good to be true, it probably is; compare the cost of using credit vs. cash; avoid rushing to a good deal (impulse buying)