Chapter 6 Consumer Purchasing Strategies and Wise Buying of Motor Vehicles McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Wise Buying of Motor Vehicles and Other Purchases Chapter Objectives Identify strategies for effective consumer buying Implement a process for making consumer purchases Describe steps to take to resolve consumer problems Evaluate legal alternatives available to consumers 6-2

Objective 1 Identify Strategies for Effective Consumer Buying 6-3

Practical Purchasing Strategies Timing purchases Store selection Brand Comparison Label Information 6-4

Practical Purchasing Strategies Price comparison 6-5

Wise Buying Techniques 6-6

Practical Purchasing Strategies Warranties Express warranty (usually written) Implied warranty 6-7

Warranties Service Contracts Used Car Warranties New Car Warranties 6-8

Research-Based Buying Major Purchase Decision-making Process Phase 1: Pre-shopping Activities Phase 2: Evaluating Alternatives 6-9

Research-Based Buying Major Purchase Decision-making Process Phase 3: Selection and Purchase Phase 4: Post-purchase Activities 6-10

Objective 2 Implement a Process for Making Consumer Purchases A Research-based Approach to Buying a Motor Vehicle 6-11

Buying a Motor Vehicle Phase 1 – Pre-shopping Activities Problem Identification Information Gathering 6-12

Buying a Motor Vehicle Phase 2 - Evaluating Alternatives 6-13

Buying a Motor Vehicle Purchase Alternatives 6-14

Price Analysis & Comparison Shopping Comparison Shopping can be beneficial when: 6-15

Buying a Motor Vehicle Selecting Vehicle Options Performance Options Comfort and Convenience Options Aesthetic Features 6-16

Buying a Motor Vehicle Comparing Used Vehicles Common sources of used cars include: 6-17

Buying a Motor Vehicle Leasing a Motor Vehicle Advantages Disadvantages 6-18

Buying a Motor Vehicle Financial Aspects of Leasing Capitalized cost = price of the vehicle Money factor = interest rate Payment schedule Residual value = expected value of the vehicle at the end of the lease 6-19

Buying a Motor Vehicle Phase 3 - Determining Purchase Price Negotiation may lower price or add features Used-Car Price Negotiation The more new cars sold the more used cars there are for sale, keeping the prices down 6-20

Buying a Motor Vehicle Price Bargaining for New Cars Sticker price = suggested retail price Invoice price = dealers cost Until price of the new car is settled: 6-21

Buying a Motor Vehicle Price Bargaining for New Cars Price bargaining - compare dealers Set-price dealers Car buying services = auto broker Sales agreement = specific details Consumer protection for new-car buyers 6-22

Buying a Motor Vehicle Price Bargaining for New Cars Sales Techniques to Avoid 6-23

Buying a Motor Vehicle Comparing Financial Alternatives Financing sources Low payment or low rate ≠ best Check the APR and any rebates 6-24

Buying a Motor Vehicle Phase 4: Post-purchase Activities 6-25

Buying a Motor Vehicle Phase 4: Post-purchase Activities Automobile Operating Costs Fixed Costs Variable Costs 6-26

Buying a Motor Vehicle Phase 4 - Post-purchase Activities Automobile Operating Costs 6-27

Buying a Motor Vehicle Phase 4 - Post-purchase Activities Vehicle Servicing Options Be alert for signs of fraud 6-28

Objective 3 Describe Steps to Take to Resolve Consumer Complaints Resolving Consumer Complaints Step 1: Return to place of purchase Step 2: Contact company headquarters 6-29

Resolving Consumer Complaints Step 3: Obtain consumer agency assistance Mediation - Arbitration - Step 4: Take legal action 6-30

Objective 4 Evaluate Legal Alternatives Available to Consumers Legal Options for Consumers Small claims court 6-31

Legal Options for consumers con’t. Class action suits Using a lawyer Other legal alternatives Legal aid society Prepaid legal services