Deck 8: Vehicles and Other Major Purchases

Question 1

With a rebate,the seller refunds a portion of the purchase price of the product either as a direct payment or a credit against future purchases.

Answer 1

True

Question 2

An increasing number of people are using the Internet to shop for appliances,vehicles,furniture,and other "big ticket" items.

Answer 2

True

Question 3

New car manufacturers are required to disclose the vehicle's overall environmental impact in a window sticker.

Answer 3

True

Question 4

Buying items that are on sale is only helpful when you will really use the item.

Question 5

You can always get more for your old car by trading it in for a new car rather than by selling it on your own.

Question 6

Buying on impulse not only results in higher spending but failure to obtain what is really wanted.

Question 7

You can estimate the trade-in value of your car on the websites for the National Automobile Dealers Association,Edmunds,or Kelley Blue Book.

Question 8

The sticker price on a new car is typically the final sales price.

Question 9

Needs and wants should both be considered necessities.

Question 10

To compare the two APRs accurately when choosing between low interest rate dealer financing and a rebate on a new vehicle,you must subtract the opportunity cost of the foregone rebate from the finance charge of the dealer financing.

Question 11

When shopping for any product,it may help to review publications on a more specific topic,such as PC World.Bear in mind that trade magazines accept advertising for the products they report on and may not be as unbiased as Consumer Reports.

Question 12

Prioritizing wants becomes easier when a decision has multiple facets.

Question 13

One can lower monthly auto payments by shortening the repayment period on the loan.

Question 14

An ill-advised credit purchase can have negative effects on your budget for years.

Question 15

Prioritizing wants includes the careful consideration of benefits and the costs of various options.

Question 16

The principles of planned buying are especially useful when you are purchasing vehicles and other expensive products.

Question 17

A car's sticker price is the manufacturer's suggested retail price.

Question 18

Sellers should not be used as information sources in preshopping research since they have a vested interest in selling you their products and services.

Question 19

A "best buy" is the product with the lowest price you can find.

Question 20

The larger the down payment one can make on a purchase,the easier the payments will fit into one's budget.

Question 21

Prices on "big ticket" items such as vehicles,furniture,appliances,and electronic equipment are usually the same from seller to seller.

Question 22

A walkaway lease is also called an open-end lease.

Question 23

Balloon auto loans were developed by lenders in response to the popularity of auto leasing.

Question 24

A "best buy" is a product or service that,in the buyer's opinion,represents acceptable quality at a fair or low price for that level of quality.

Question 25

If you plan to purchase the vehicle at the end of the lease period,you would pay the actual cash value if your lease was closed-end.

Question 26

Sellers are the only source of financing for big ticket items.

Question 27

Capitalized cost reductions are monies paid on the lease at its inception,including any down payment,trade-in value,or rebate.

Question 28

An acquisition fee cannot be included in the gross capitalization cost.

Question 29

If you plan to purchase the vehicle at the end of the lease period,you would pay the residual value if your lease was open-ended.

Question 30

When researching safety on a vehicle,you should check on recalls.

Question 31

When comparison shopping,your goal is to make a decision to purchase an item.

Question 32

The early termination payoff is the total amount you would need to repay should you wish to end the lease agreement early and includes the early termination charge and the unpaid lease balance.

Question 33

With an auto leasing arrangement,you are renting the car with the ownership title remaining with the lease grantor.

Question 34

The money factor (or lease rate or lease factor)measures the rent portion of your lease payment.

Question 35

When comparison shopping,the "rule of 3" says you should visit a store three different times before making a major purchase.

Question 36

During the comparison-shopping phase,you narrow the choices so you can begin negotiating for the best deal.
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Question 37

An early termination charge may be levied if you decide to end a lease prematurely.

Question 38

The gross capitalized cost includes the price of the vehicle plus what the dealer paid to finance the purchase plus any other items,including insurance or a maintenance agreement over the life of the lease.

Question 39

Leases work best for people who plan to buy a new vehicle every five to seven years.

Question 40

The residual value is the projected value of the leased asset at the beginning of the lease time period.

Question 41

Dealer holdback programs permit the dealer to retain a portion of the invoice price.

Question 42

One part of a product can be covered by a full warranty while the rest of the product could be covered by a limited warranty.

Question 43

The invoice price is not related to the seller's cost of a product.

Question 44

Negotiating is a waste of time for most big ticket purchases we make.

Question 45

An express warranty must be classified as either a full or a limited warranty.

Question 46

To be most successful in negotiating,one must be willing to walk away from the deal if it does not fit your expectations and desires.

Question 47

Service contracts are generally very profitable for their sellers.

Question 48

A consumer should tell the car salesperson how much he or she can afford for a car so the salesperson can help him or her find an affordable car.

Question 49

Service contracts are becoming more prevalent in the new car market because they are generally a good value for consumers.

Question 50

The first step in negotiating a new vehicle purchase is to obtain a firm commitment for your trade-in.

Question 51

The Magnuson-Moss Warranty Act provides guidelines for express warranties on products costing more than $15.

Question 52

Negotiating becomes easier for the buyer when there are multiple variables such as price,trade-in product and financing options in the overall deal.

Question 53

Full warranties are valid for the life of the product.

Question 54

Sellers expect consumers to negotiate the price for autos and some other major purchases we make.

Question 55

Under a full warranty,a product will be fixed at no cost to the buyer.

Question 56

Written warranties are required by federal law on all new products costing over $15.

Question 57

Implied warranties are in effect unless a product is sold as is.

Question 58

A service contract comes at no additional cost and offers free repairs for a specific period of time.

Question 59

A limited warranty covers free parts and labor.

Question 60

You may want to buy a service contract for peace of mind,but it is generally unwise economically.

Question 61

All states have enacted new-vehicle lemon laws.

Question 62

Which of the following would most likely be considered a need rather than a want?​

A) ​Airbags
B) ​Air conditioning
C) ​Automobile
D) ​Automatic transmission

Question 63

Which is not a step in the planned buying process?

A) ​Prioritizing wants
B) ​Preshopping research
C) ​Purchasing on credit
D) ​Comparison shopping

Question 64

The best place to make your final purchase decision is at the place of purchase.

Question 65

A consumer can save money by

A) ​paying cash for purchases.
B) ​avoiding buying on impulse.
C) ​stocking up on advertised specials.
D) ​all of these.

Question 66

Of these four items,which is most aptly described as a need?

A) ​Shelter
B) ​A new house
C) ​Home ownership
D) ​A condominium

Question 67

Alternative dispute resolution programs are industry- or government-sponsored programs that provide an avenue to resolve disputes outside the formal court system.

Question 68

Arbitration as a method of alternative dispute resolution is always binding on both parties.

Question 69

Most auto dealers will provide a used-vehicle history report at no cost to a prospective buyer.

Question 70

A common definition of a lemon is a vehicle that has been in for repairs at least two times for the same problem in the first year after purchase.

Question 71

Buying without fully considering priorities and alternatives is called

A) ​impulse buying.
B) ​unplanned purchasing.
C) ​money saving.
D) ​planned buying.

Question 72

You should sign a buyer's order for a vehicle only after the salesperson and sales manager have already done so.

Question 73

Low-balling generally occurs just before the close of a sale.

Question 74

The National Automobile Dealers Association website is a good source of used car prices.

Question 75

Consumer Reports annual buying guide is published in​

A) ​January.
B) ​April.
C) ​September.
D) ​December.

Question 76

Redress means to right the wrong.

Question 77

Consumer Reports comprehensive review of makes and models of vehicles occurs annually in its ____________ edition.

A) ​January
B) ​April
C) ​September
D) ​December

Question 78

____ should be completed before interacting with sellers.

A) ​Distinguishing between needs and wants
B) ​Preshopping research
C) ​Fitting the budget
D) ​All of these

Question 79

New cars typically lose 25 percent of their value in the first year.

Question 80

____ publishes a list of recommended used cars in various price ranges each April.

A) ​Kiplinger's Personal Finance
B) ​Consumer Reports
C) ​Money Magazine
D) ​Car and Driver