Module 9 & 10
Leasing costs more than buying a car because you still pay the first month's payment, title, taxes, registration, banking fees, and a security deposit.
F
When you lease a car, you never have to worry about the number of miles you drive.
F
The FTC protects consumers from fraud and illegal business practices and works to ensure that the nation's markets are efficient and free of practices which might harm consumers.
FTC
Fine print
Fine print: text in a formal agreement that is printed smaller than the rest of the text
Consumer Product Safety Commission (CPSC), Food and Drug Administration (FDA), and Federal Trade Commission (FTC) all provide consumer with information about products and services.
For example, the CPSC provides information on product safety, the FDA provides information on the safety and effectiveness of products, and the FTC provides consumers with information and alerts regarding fraud and unfair business practices.
The amount of money needed for a down payment on a home is greater than the amount needed to rent a home.
T
The state law that addresses tenant-landlord issues is the Virginia Residential Landlord and Tenant Act (VRLTA).
T
When you lease a car, your monthly payments for that car may be lower than the monthly payments for a loan for the same car.
T
_Savings accounts, despite offering a relatively low annual percentage of interest, are the safest place to keep money that you will definitely need in the future. (or certificate of deposit
T
4 P's of Marketing
The 4 Ps of marketing: Product Price Place Promotion
Scarcity
prohibits you from using the same dollar
Paid Media advertising
search engine advertising that is "pay-per-click"
The CPSC and the FDA protect consumers purchasing goods and services.
T
The Federal Trade Commission (FTC) monitors suspected fraud.
T
Null and void
(adj.) without legal force or effect; no longer binding
advertising and demand
A business advertises to increase demand. A business weighs the costs and benefits of advertising.
Payday loan
A payday loan is a small, short-term unsecured loan (not necessarily linked to a paycheck). Payday loans are a very expensive way to borrow money.
Title loan contract
A title loan is a small loan made for a short time period.
Additional costs
Additional costs Be prepared for the additional costs of car operation including gasoline expense and oil changes. Routine maintenance must be completed regardless of the type of vehicle purchased.
there's no free lunch
Every choice has an opportunity cost; everything costs something.
To minimize the risk from a contract
Ask questions and get advice if there is anything you are unsure about or don't understand. Negotiate or shop around for the best contract. Ask the seller to explain the contract. Make sure all parts of the agreement, including verbal promises or claims are attached in writing to the contract. Don't be pressured into signing a contract. Never sign a blank contract or allow details to be filled out later. Check to make sure that any figures and other information added to the contract are correct. Get a copy of any contract you sign.
Develop a savings plan for a down payment or purchase
Before making a purchase, start setting aside money for a vehicle. Estimate how much money will be needed to make a purchase and how long to save to accumulate the needed funding.
Breach
Breach: an act of breaking the terms set out in a contract
conspicuous consumption
Buying goods and services not for their intrinsic value but for the purpose of impressing others in hopes of improving one's social status.
The CPSC promotes the safety of consumer products by addressing "unreasonable risks" of injury, developing uniform safety standards, and conducting research into product-related illness and injury.
CPSC
Which of the following government agencies provide(s) consumer information about goods and services?
CPSC
Co-branding and affinity marketing
Co-Branding and Affinity Marketing—Two brands join together to promote a single product or service
Condition
Condition: an act or event that affects a party's contractual duty. For example, I will sell you my car if you pay and pick it up by Tuesday. Picking up the car by Tuesday is a condition of the sale.
8 steps for evaluating information sources
Consider the source. Read beyond the headline. Check the author. What's the support? Check the date. Is this some kind of joke? Check your biases. Consult the experts.
Agencies oversee consumer info
Consumer Product Safety Commission (CPSC) Food and Drug Administration (FDA) Federal Trade Commission (FTC) Consumer Financial Protection Bureau (CFPB) Securities and Exchange Commission (SEC)
Cause marketing
Cooperation between a for-profit business and a non-profit organization to promote social and charitable causes
Drawbacks of buying a house
Costs of buying a house include: financial responsibility for real estate taxes and repairs the need for a large down payment greater difficulty when you want to move
Choosing a car can be a difficult decision. You need to consider many factors, such as the following:
How much money do you have? What can you afford to spend on monthly payments? What impact will your decision have on your income and savings? How long do you plan to keep the car?
informative and persuasive advertising
Informative advertising provides information about the benefits and features of a product. Persuasive advertising tries to convince a consumer to buy a particular product.
Landlords
Landlords are responsible for general maintenance on the rented property, so renters do not face the expense of upkeep.
Mortgages
Loans from banks and building societies that are used to buy land and buildings such as offices and shops. - Property taxes and insurance expenses are in addition to the monthly mortgage payment. - Fixed interest loans charge the same amount of interest through the length of the loan, while adjustable rate mortgages (ARM) will have an interest rate that is variable over time and could raise the monthly payment over time. -Mortgage loans are paid off over a long period of time, and real estate values can change over that time period. Depending on where you live, a house may hold its value, appreciate (gain value), or depreciate (lose value) over time
Marginal benefit is the additional satisfaction gained from consuming an additional unit of the good. It refers to the advantage associated with the consumption of one more unit of a product. The total benefit is total satisfaction derived from the consumption of goods and services. The total benefit of consuming two doughnuts is the sum of consuming the first two doughnuts. = 30 +45 =45
Marginal benefit
using marginal analysis for comparison shopping
Marginal cost is the additional cost of an additional unit Marginal benefit is the additional benefit of an additional unit Maximization occurs where MC = MB
POP marketing
Marketing that happens where products and consumers are located, for example product displays and on-product coupons
Internet Marketing
Marketing via the internet or email
Skimming. dishonest salespeople use a special device that records (and steals) your credit or debit card information as they process your card.
T
Eliminating paper bills and statements and going paperless also has potential costs. For example:
Missing payments: Someone could miss a payment without the arrival of a physical statement in the mail. However, it is possible to set up electronic reminders. Remembering passwords: Signing up for paperless billing requires a username and password. And forgetting the password requires going through the recovery process before checking your statement. Access to older statements: Businesses only make a certain number of statements available online. If you need more than that, e.g., for tax purposes, it may cost you time or money to get them. Delay in monitoring accounts: If you've set up an automatic payment for your account, you could easily forget to review your statements each month, a step that's critical to catching credit card fraud.
consequences of conspicuous consumption
Opportunity cost Debt/interest payments Credit problems
Outbound vs Inbound marketing
Outbound marketing refers to any kind of marketing where the business initiates the conversation and sends its message out to potential customers. Inbound marketing attracts customers by creating content and experiences that connect to potential customers by providing content they are looking for.
Examples of filing systems
Personal papers—social security card, birth certificate, educational transcripts Tax documents—tax forms, tax returns, and associated documentation Housing information—leases or deeds, titles, and surveys and mortgages Car documents—titles, leases, maintenance records Insurance policies—rental property, auto, life, homeowners Household inventory—list of valuable property Employment information—paycheck stubs, benefits statements, retirement statements Bank records—account information for all checking, savings, and other accounts Financial information—credit card statements, loan documents, investment information, charity donation receipts Health and medical records Will and estate documents—will, power of attorney, living will
PACED decision model
Problem—determine the problem to be solved by the decision Alternatives—list alternatives that are being considered Criteria—establish the different criteria that you will use to make the decision Evaluate—evaluate each alternative considered according to the criteria established Decide—make the decision based on the evaluation of the criteria
Car insurance
Property damage liability, Bodily injury liabilityMedical payment insurance, Uninsured motorist coverage Collision coverage Comprehensive coverage
Phishing. identity thieves send you e-mails in the name of banks, companies, or government agencies, trying to trick you into giving them your personal information.
T
Types of sales incentives
Rebates Product guarantees Product warranties
word mouth advertising
Recommendations from users, including online reviews
Should you "go paperless"?
Reducing paper use: Paperless statements are helpful for the environment by reducing the amount of paper used. Reducing clutter: Most banks and credit card issuers make billing statements available online, so there is no need to keep paper copies. Incentives: Some businesses offer incentives to customers who sign up to go paperless. For example, a bank might give a $5 deposit to the savings account of a customer who elects to go paperless. Identity theft prevention: Switching to paperless statements could help prevent identity theft from stolen mail. Of course, electronic documents need to be kept secure.
Rented properties: Modification restrictions
Rented properties may have restrictions on modifications that can be made to the dwelling such as paint color and fixtures.
Rented properties: Usage restrictions
Rented properties may have restrictions on them regarding use such as a limit on the number and size of pets.
No built equity or tax benefits
Renters do not build equity and do not receive tax benefits by paying rent.
Address complaints
Return to the place of purchase. Go there with a polite but firm approach. This will usually solve the problem. Contact the business's main office. Write a letter or email. Most complaints to the company are resolved immediately. Get help from a government or private consumer protection agency. Take legal action, possibly in small claims court, which oversees disputes under a certain amount of money.
Which of the following could be included in the expenses for a renter?
Security Deposit Additional fees. First and last month's rent
Providing social media users with content they want to share
Social Networks and Viral Marketing
Types of Consumer contracts
Standard—the same for all consumers Negotiated—individualized for each customer The format of a contract can be written, verbal, or electronic
To begin the home-buying process, start saving for a down payment and acquire a pre-approval letter from a mortgage lender. Locate a real estate agent to help you through the home-buying process.
Starting the home-buying process
Story Telling marketing
Storytelling—Telling a memorable tale of the company, what it does, how it solves problems, what it values, and how it contributes to the community
Benefits of buying a house include: being able to make changes and repairs to the dwelling building equity from their purchase receiving a tax benefit from mortgage interest payments
T
Collision coverage pays for damages to your car in case you are in an accident. When pricing collision insurance, consider the cost of your vehicle. There is no point in getting collision insurance that costs more than your car is worth. Comprehensive coverage pays for damages from theft, vandalism, acts of nature, fire, and collisions with animals. Many lenders require comprehensive coverage as part of a car loan. It also covers the cost of these damages to victims in case you cause an accident.
T
Every person has a credit score, which indicates their level of financial risk to a lender. Higher scores are better, as those individuals have a lower risk of not paying back a loan. People with the highest scores are most likely to get the best interest rates and the most approvals for mortgages and other financing
T
Financial and personal records can be kept in hard copy or an electronic filing system
T
Many consumer complaints are the result of fraud.
T
FDA
The FDA is responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation's food supply, cosmetics, and products that emit radiation.
Title Loan
The borrower gives the lender his/her automobile title in exchange for a set amount of cash. The lender holds the title until the loan is repaid. If the loan is not repaid as agreed, the lender keeps title to the item. It is made for a short time period If the loan is not repaid on time the lender takes the vehicle It requires the title to a vehicle (e.g. car) and fee They are a very expensive way to borrow money
Under which of these situations should an individual choose to buy instead of rent?
They want to renovate their living space they enjoy doing maintenance and upkeep on their home they have saved enough money for a sizable down payment on a home
The CFPB and SEC (Securities and Exchange Commission) regulate financial information.
True
Used vs. New Cars
Used vs. new cars New cars have higher prices but depreciate in value quickly. Used cars are less expensive but will have higher maintenance costs.
Comparison shopping terms
Value—value includes the quality of a product or service as well as its price. Time—comparison shopping takes time. Consider the benefit from comparison shopping compared to the value of your time. Convenience—The ability to make a purchase quickly or with little effort or difficulty. Dollar cost—The total dollar cost includes all payments, taxes, and other fees required for the purchase. Opportunity cost—the value of the next best alternative. Payment options—If you will not be paying cash to purchase a product or service, you will need to determine how you will pay for it.
Consumers responsibilities include:
Verifying receipts and statements Maintaining consumer vigilance Safeguarding against fraud Using consumer protection laws and government agencies Using private consumer protection groups
Warranty
Warranty: a guarantee or promise that specific facts or conditions in the contract are true or will happen
certificate of deposit
a certificate issued by a bank to a person depositing money for a specified length of time.
broker
a person who is paid to buy and sell for someone else
Car insurance
a type of insurance that covers any damage you may cause to another person or their vehicle - Determine the costs and types of car insurance to be purchased.
Rent-to-own contracts
also known as lease to own or a lease purchase,
Consumers have the right to:
be informed be safe choose be heard have avenues for redress of grievances
Examples of consumer contracts
cellphone contract payday loan title loan rent-to-own
Filing systems
chronological alphabetical tickler system
fraud and scams car buying credit cards
consumer complaints
Consumer contract
consumer contract is a contract made between a merchant seller and a consumer. - verbal, written, electronic
three-day rescission period
consumers the right to cancel certain kinds of sales within 3 days.
FDA product labeling
enforces the Federal Food, Drug, and Cosmetic Act and its amendments. Food labeling is required for most prepared foods, such as breads, cereals, canned and frozen foods, snacks, desserts, and drinks. The FDA works to ensure the safety, proper labeling, and purity of foods, drugs, vaccines, devices, and cosmetics.
financial advisor
financial advisor is a person who is employed to provide financial services or guidance to clients.
Source o/financial info
government agencies financial institutions investor services and newsletters financial magazines and newspapers annual reports
What to consider when evaluating consumer information
incentives of information sources fact versus opinion use of data and statistics advisor quality and performance
Product recalls
large quantity of a product isn't safe for use. child safety seats cosmetics food medication toys vehicles
Buyer's remorse
law that gives consumers the right to cancel contracts or return goods for any reason or no reason during a given number of days after purchase.
CARFAX
place where four roads meet; intersection of roads at center of a town
Sources of consumer information
product attributes expert and customer reviews seller reputation government agencies consumer organizations product review sites and apps
A buyer's remorse law gives consumers the right to return goods for any reason or no reason during a given number of days after purchase.
true
A sublet occurs when a lease is passed on to another tenant.
true
Cellphone contracts are standard contracts; they contain the same language for every customer.
true
You should only make a purchase if the marginal benefit of the good or service exceeds the marginal cost
true
Force majeure:
unforeseeable circumstances that prevent someone from fulfilling a contract
Assignment
when one party to an existing contract hands off the contract's obligations and benefits to another party
Earned Media/Public Relations
—Publicity not from advertising, like newspaper articles
Direct Selling
—Sales people build face-to-face relationships with customers