1. 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.

2. 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

3. Objective 1 Identify Strategies for Effective Consumer Buying
6-3

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

5. Practical Purchasing Strategies
Price comparison
6-5

6. Wise Buying Techniques
6-6

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

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

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

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

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

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

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

14. Buying a Motor Vehicle Purchase Alternatives
6-14

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

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

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

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

19. 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

20. 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

21. 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

22. 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

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

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

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

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

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

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

29. 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

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

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

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