Deck 8: Vehicles and Other Major Purchases

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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 5

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.

Question 6

Prioritizing wants becomes easier when a decision has multiple facets.

Question 7

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

Question 8

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

Question 9

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 10

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

Question 11

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

Question 12

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

Question 13

Needs and wants should both be considered necessities.

Question 14

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

Question 15

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

Question 16

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 17

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

Question 18

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

Question 19

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

Question 20

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 21

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 22

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 23

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 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

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 29

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

Question 30

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

Question 31

Comparison shopping can be done by window shopping at vehicle dealers.

Question 32

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

Question 33

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

Question 34

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 35

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

Question 36

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

Question 37

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

Question 38

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

Question 39

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 40

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

Question 41

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

Question 42

Full warranties are valid for the life of the product.

Question 43

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

Question 44

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

Question 45

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

Question 46

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 47

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

Question 48

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 49

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

Question 50

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

Question 51

A limited warranty covers free parts and labor.

Question 52

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

Question 53

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

Question 54

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

Question 55

Service contracts are generally very profitable for their sellers.

Question 56

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

Question 57

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

Question 58

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 59

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

Question 60

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 61

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 62

Arbitration is always binding on both parties.

Question 63

Vehicle manufacturers utilize mediation and arbitration as part of their warranty procedures.

Question 64

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 65

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

Question 66

Which is not a step in the planned buying process?

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

Question 67

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 68

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

Question 69

____ 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

Question 70

Consumer Reports annual buying guide is published in

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

Question 71

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

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

Question 72

____ 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 73

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 74

Buying without fully considering priorities and alternatives is called

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

Question 75

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

Question 76

All states have enacted new-vehicle lemon laws.

Question 77

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 ____.

A)$21,560
B)$19,800
C)$19,360
D)$21,340

Question 78

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

Question 79

Redress means to right the wrong.

Question 80

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