Chapter 8 Flashcards
Buying without fully considering priorities and alternatives is called…
Impulse buying
A consumer can save money by…
Paying cash for purchases, buying generic products, and stocking up on advertised specials.
Shopping at a convenience store generally costs more money because…
prices are higher on many items.
What should be completed before interacting with sellers?
Distinguishing between needs and wants, preshopping research, and fitting the budget.
The most comprehensive information about automobiles appears in which issue of Consumer Reports?
April
What is the true cost of an automobile to the dealer?
IT IS NOT the sticker price, MSRP, or the dealer holdback.
What does it mean in auto leasing and auto financing when you are said to be upside down?
You owe more on the car than it is worth.
What is a refund of part of the purchase price?
A rebate
Shad Yarbrough wants to consider the cost per use of the personal computer he is considering. The personal computer costs $1,750 and has a life expectancy of four years. If Shad feels he would use the computer three days a week, on average, what is Shad’s cost per use?
$2.80
Mary kay has decided she would like to negotiate on a new car with a sticker price of $22,000. The typical dealer cost on this vehicle is approximately…
$19,360
Brian Foge has decided he would like to negotiate on a car with a $32,000 sticker price. If the the dealer’s cost on this car is 15 percent lower than the sticker price, Brian should be able to negotiate a price somewhat higher than…
$27,200
The dealer cost of new cars averages about what percent lower than the sticker price?
12%
What is the process of comparing products or services to find what you think is the best buy?
Comparison Shopping
The product that is the best buy will be the one with the…
acceptable quality at a fair price.
An automobile buyer can call the National Highway Traffic Safety Administration auto hotline to get information on what?
Government safety test results, recalls, and theft ratings.
What is the first consideration in any negotiation?
Price
Which “rule” says to compare at least three alternatives before making a major purchase decision?
The Rule of Three
In what lease must you pay any difference between the projected residual value of the vehicle and its actual market value at the end of the lease period?
An open-ended lease.
The Consumer Leasing Act limits end-of-lease payments to a maximum dollar amount equivalent to what?
Three times the monthly payment.
With a closed-end lease, there is…
no charge if the end-of-lease value of the vehicle is lower than the originally projected residual value and the possibility of some end-of-lease charges on excess wear and mileage.
Other things being equal, one would want to finance this car rather than take this lease if the finance cost were less than…
the residual value and disposition charge combined.
Which is NOT an additional charge when leasing an automobile?
the residual value
With a balloon auto loan the last payment is equal to what?
The projected residual value of the vehicle at the end of the loan period.
Jessie Ridley just bought an SUV and financed it with an automobile loan. She will pay 48 monthly payments of $425 each and one final payment of $3,000. What type of clause is in her sales contract?
Balloon
A service contract offers free or low-cost repairs to the product for how long?
For a specified period of time.
What percent of service contracts are never used?
80%
A service contract is very much like what?
Insurance
Service contracts are also called what?
Extended Warranties
When negotiating to purchase a vehicle, besides the price, what other variables should be considered?
the trade-in value, prices of options, and service contract costs.
The key to success in negotiating a car purchase is to obtain the what before discussing any other aspects of the deal?
Price of the car.
What should you never discuss with an auto dealer?
Your affordable monthly payments.
Where should a person NOT make decisions for expensive purchases?
inside the retail store or in a showroom.
Where can you buy a car which allows you to learn more information about its history?
A private individual
Where can you buy a car where there tends to be more reliability and more expensive used cars?
A new car dealership
