Personal Finance Chapter 6- Consumer Purchasing Strategies and Wise Buying of Motor Vehicles
Limited Warranty
Covers only certain aspects of the product, such as parts, or requires buyer to incur part of the costs for shipping or repairs
Invoice Price
Dealer's cost
Express Warranty
Full or limited warranty
Sticker Price
Suggested retail price
Implied Warranty
covers a product's intended use or other basic understandings that are not in writing -warranty of title (right to sell) -warranty or merchantability (fit for intended use)
Residual Value
expected value of the vehicle at the end of the lease -if residual<market value, return it
Highballing
high trade-in offer + high new car price
Money Factor
interest rate
Lowballing
low price quote increases with last minute add ons
Legal Aid Society
one of a network of publicly supported community law offices that provide legal assistance to consumers who cannot afford their own attorney
Capitalized Cost
price of the vehicle -92% avg buyer -96% avg leaser
Prepaid legal services
unlimited legal assistance for a set fee
Disadvantages to leasing a motor vehicle
-no ownership interest -must meet requirements -may have additional costs for extra mileage, turning in early, repairs
Advantages of Leasing a Motor Vehicle
-small cash outflow -lower monthly payments than buying -lease provides detailed records -able to obtain more expensive car more often
Legal Options for Consumers
-small claims court -class action suits -using a lawyer -legal aid society -prepaid legal services
Used Car Warranty
-FTC requires used cars to have a buyer's guide sticker -warranty of merchantability
Practical Purchasing Strategies
-Timing purchases -Purchase location -Brand comparison -Label information -Price Comparison -Warranties
New Car Warranty
-basic parts against defects -power train coverage -corrosion warranty
Fixed Automobile Operation Costs
-depreciation -interest on loan -insurance -license, registration, taxes
Variable Automobile Operation Costs
-gas and oil -tires -maintenance and repairs -parking and tolls
Research Based Buying
Phase 1- pre-shopping activities Phase 2- Evaluating alternatives Phase 3- Selection and Purchase Phase 4- Postpurchase activities
Small Claims Court
a court that settles legal differences involving amounts below a set limit and employs a process in which the litigants usually do not use a lawyer
Full Warranty
a defective product can be fixed or replaced during a reasonable amount of time
Class Action Suits
a legal action taken by a few individuals on behalf of all the people who have suffered the same injustice
Service Contract
an agreement between a business and a consumer to cover the repair costs of a product -extended warranty
