Consumer Purchasing and Wise Buying Strategies

Comparing used vehicles

◦Average used car costs about $10,000 less than a new car ◦Common sources of used cars include: New-car and used-car dealers Individuals Auctions and dealers Banks, credit unions, and other financing organizations Used-car superstores, such as CarMax

Problem identification

◦Effective decision making should start with an open mind

Factors of Negotiation

◦Having all the necessary information about the product and the buying situation Dealing with a person who has the authority to give you a lower price or additional features

Avoid these sales techniques

◦Lowballing ◦Highballing ◦"How much can you afford per month?" ◦Offer to hold vehicle for small deposit ◦Unrealistic statements ◦Sales agreements with preprinted amounts ◦Attempts to upsell vehicle features and services ◦Efforts to inflate the loan interest rate or lengthen the term of the loan ◦Not informing you of dealer rebates or price-matching offers

Used-car warranties

◦Most states have implied warranties of merchantability to protect buyers and guarantee the used car will run - at least for a while!

Selection and Purchase

◦Negotiation activities to obtain lower price or added quality ◦Payment alternatives including use of cash and various credit plans ◦Assessment of acquisition and installation that might be encountered

To minimize consumer problems before making a purchase:

◦Obtain recommendations from friends, family members, and online reviews ◦Verify company affiliations, certifications, and licenses ◦Understand the sale terms, return policies, and warranty provisions

Selecting vehicle options

◦Optional equipment may be viewed in three categories: Mechanical devices to improve performance Convenience options Aesthetic features that add to the vehicle's visual appeal

Preshopping Activities

◦Problem identification to set a goal and focus your purchasing activities ◦Information gathering to benefit from the buying experience of others

Small claims court

settles legal differences involving amounts below a set limit and employs a process in which the litigants usually do not use a lawyer

Class-action suits

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

Comparison shopping

the process of considering alternative stores, brands, and prices

Impulse buying

unplanned purchasing, which can result in financial problems

Set-price dealers

use no-haggling car selling with the prices presented to be accepted or rejected as stated

unit pricing

uses a standard unit of measurement to compare the prices of packages of different sizes

express warranty

usually in written form, is created by the seller or manufacturer and has two forms: ◦Full Warranty or Limited Warranty

Evaluating Alternatives

◦Attribute assessment with comparison of features ◦Price analysis including consideration of the costs at various buying locations ◦Comparison shopping activities

Postpurchase Activities

◦Proper maintenance and operation ◦Identification and comparison of after-sale service alternatives ◦Resolution of purchase concerns that may occur

Price bargaining for new cars

◦Sticker price is the suggested retail price ◦Invoice price is the dealer's cost and is less than sticker price ◦Negotiation range is the difference between the sticker price and the dealer's cost

Several buying techniques are commonly suggested for wise buying:

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

buying techniques are commonly suggested for wise buying:

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

Used-car price negotiation

◦Various factors influence the price of a used car, such as the number of miles, features, and options

Information gathering

◦Information is power ◦Most useful information sources include: Personal contacts Business organizations Media information Independent testing organizations Government agencies Online reviews

legal alternatives available to consumers

If a consumer problem cannot be resolved through communication with the company involved or with help from a consumer protection agency, the following legal means are available: ◦Small claims court; ◦Class-action suits; ◦The services of a lawyer; ◦Legal aid societies; and ◦Prepaid legal services

Consumer protection experts suggest that to prevent being taken by deceptive business practices, you should:

1.Do business only with reputable companies with a good record of satisfying customers 2.Avoid signing contracts and other documents you do not understand 3.If it seems too good to be true, it probably is! 4.Compare the cost of using credit versus cash Also compare interest rates the seller offers with those offered by a bank or a credit union 5.Avoid rushing to get a good deal

process for making consumer purchases

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

steps to take to resolve consumer problems

1.Return to the place of purchase; 2.Contact the company's main office; 3.Obtain assistance from a consumer agency; and 4.Take legal action.

Leasing advantages

Only a small cash outflow may be required for the security deposit, whereas buying can require a large down payment Monthly lease payments are usually lower than monthly financing payments Lease agreement provides detailed records You are usually able to obtain a more expensive vehicle

strategies for effective consumer buying

Timing purchases, comparing stores and brands, using label information, computing unit prices, and evaluating warranties are common strategies for effective purchasing.

Websites used to assist in basic legal documents:

Websites such as LegalZoom, Nolo, and Rocket Lawyer are available to assist with basic legal documents

implied warranty

covers a product's intended use or other basic understandings that are not in writing

To prevent confusion in determining the true price of the new car:

do not mention a trade-in vehicle until the cost of the new car has been settled

Leasing disadvantages

You have no ownership interest in the vehicle You must meet requirements similar to qualifying for credit Additional costs may be incurred for extra mileage, certain repairs, turning the car in early, or even moving to another state ◦When leasing, be sure you know the true cost, including: Capitalized cost, the price of the vehicle Money factor, the interest rate being paid on capitalized cost Payment schedule, the amount paid monthly and number of total payments Residual value, or expected value of vehicle at end of lease

warranty

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

Service contracts

agreements between a business and a consumer to cover the repair costs of a product

Car-buying services

businesses that help buyers obtain a specific new car at a reasonable price

New-car warranties

◦Vary in the time, mileage, and parts they cover ◦Main conditions of a new-car warranty are the following: Coverage of basic parts against defects; Power train coverage for engine, transmission, and drive train; Corrosion warranty

Leasing

◦is a contractual agreement with monthly payments for the use of an automobile over a set time period, typically three, four, or five years At the end of the lease term, the vehicle is usually returned to the leasing company