8 Flashcards
Need/Want
A need is something thought to be a necessity.
A want is unnecessary but desired.
preshopping research
Gathering information before actually beginning to interact with sellers.
manufacturer’s suggested retail price (MSRP)
The retail price set by the manufacturer and posted on the federally required side window sticker.
dealer invoice price
The amount the automaker charges the dealership for new vehicles at the time the dealer buys them; it does not reflect some discounts that the dealer gets.
Comparison shopping
Process of comparing products or services to find the best buy.
best buy
Product or service that, in the buyer’s opinion, represents acceptable quality at a fair or low price for that quality level.
The Internet is a superlative source of information. Begin by checking out
The Internet is a superlative source of information. Begin by checking out ConsumerReports.com, Kiplinger.com, and Edmunds.com. Then go to the vehicle companies themselves, such as Toyota.com, Ford.com, and Honda.com.
Here is a list of criteria to use when comparison shopping on how to pick the safest vehicle:
Vehicle size and weight.
Forward-collision warning (FCW).
Automatic Emergency Braking (AEB).
V2Vcrash-avoidance system.
Extra airbags.
Stability control.
Adaptive cruise control (ACC).
Blind-spot warning.
Backup visibility.
Automatic high beams.
Lane departure warning (LDW).
Pothole-Detection Technology.
Parking-assist system.
Self-driving cars.
Safety Tests.
Recalls on used vehicles.
window shopping
This is the activity of looking at the goods displayed in shop windows, especially without intending to buy anything.
upside down
A situation where the owner of a financed asset owes more than it is worth, thus creating negative equity.
bump-up scam
Auto dealers sometimes tell people that their credit score is not the best and, as a result, they have to pay a higher interest rate.
balloon automobile loan
is one that requires a larger-than-usual one-time payment at the end of the term.
When the final payment is due, perhaps when one still owes one, two, or even several thousand dollars, the borrower has five options:
Hand over the cash sum stipulated in your agreement and keep the vehicle.
Return the vehicle to the lender to pay for the balloon payment (assuming its value satisfies the amount due).
Refinance with the lender or borrow from another source.
Sell the motor vehicle and pay the balloon payment with the proceeds (assuming the vehicle will sell for an amount that is high enough).
Trade the vehicle in on a replacement vehicle, and roll over the balloon amount due into another auto loan for the newer vehicle.
subprime loans
These are a type of loan approved for people with substandard credit scores or limited credit histories.
With a rebate…
…the seller refunds a portion of the purchase price of the product either as a direct payment or a credit against the purchase (sometimes through a gift card).
lease
In this context, a contract specifying both tenant and landlord legal responsibilities
There are a number of problems to avoid when leasing:
Avoid paying money up front.
Avoid paying maintenance on leases that are too long.
Avoid paying for driving extra miles.
Avoid paying “full market price” for repairs.
gross capitalized cost (gross cap cost)
Includes vehicle price plus the cost of any extra features such as insurance or maintenance agreements.
Capitalized cost reductions (cap cost reductions)
are monies paid on the lease at its inception, including any down payment, trade-in value, or rebate.
adjusted capitalized cost (adjusted cap cost)
Subtracting the capitalized cost reductions from the gross capitalized cost.
residual value
Projected value of a leased asset at the end of the lease time period.
The money factor (or lease rate or lease factor)
measures the rent charge portion of your payment.
In an open-end lease…
…, you must pay any difference between the projected residual value of the vehicle and its actual market value at the end of the lease period.
depreciates
New vehicles and low-mileage used cars go down in value very quickly after purchase, often as much as 20 percent after leaving the dealer’s lot.
closed-end lease (also called a walkaway lease)
Agreement in which the lessee pays no charge if the end-of-lease market value of the vehicle is lower than the originally projected residual value.
An acquisition fee
is either paid in cash or included in the gross capitalization cost. It pays for a credit report, application fee, and other paperwork.
A disposition fee
is assessed when you turn in the vehicle at the end of the lease and the lessor must prepare it for resale.
An early termination charge
may also be levied if you decide to end the lease prematurely.
warranty
A type of guarantee that a manufacturer or similar party makes regarding the condition of its product.
implied warranty
the product sold is warranted to be suitable for sale
implied warranty for fitness for a particular purpose
Here the seller (or provider or manufacturer) knows the buyer’s particular use and the buyer relies on the seller’s expertise or judgment in choosing the product.
as is
Way for the seller to get around legal requirements for warranties; the buyer takes all risk of nonperformance or other problems despite any salesperson’s verbal assurances.
limited warranty
Any warranty that offers less protection than the three conditions for full warranty.
Negotiating
Process of discussing actual terms of agreement with a seller, usually on higher-priced items.
dealer holdback
A percentage of the total MSRP that the manufacturer holds and then gives back to the dealer, often at the end of the year or quarter.
high-balling
Sales tactic in which a dealer offers a trade-in allowance that is much higher than the vehicle is worth.
decision-making matrix
A system that allows one to visually and mathematically weigh the decision you are about to make.
low-balling
A sales tactic where the seller quotes an artificially low price to obtain a verbal agreement from a buyer and then attempts to raise the negotiated price when it comes time to finalize the written contract.
buyer’s order
Written offer that names a specific vehicle and all charges; only sign such offers after the salesperson and sales manager have signed first.
Buyer’s remorse
is a myth pertaining to the buyer’s supposed legal right to change his or her mind and return a vehicle after signing a purchase contract
cooling-off rule
A Federal Trade Commission rule that gives consumers three days to cancel a contract of $25 or more after signing it for a sale made anywhere other than a seller’s normal place of business.
Mediation
is a procedure in which a neutral third party works with the parties involved in the dispute to arrive at a mutually agreeable solution.
In arbitration…
… a neutral third party hears (or reads) the claims made and the positions taken by the parties to the dispute and then issues a ruling that may or may not be binding on one or both parties.
lemon laws
State laws that provide guidelines for arbitrators to use to order a dealer’s buyback of a “lemon” as defined under the law—commonly a car that has been in the shop four or more times to fix the same problem.
redress
Process of righting a wrong.
