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Chapter 8: Vehicle and Other Major Purchases Garman/Forgue Personal Finance Ninth Edition PPT slide program prepared by Amy Forgue and Ray Forgue.

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Presentation on theme: "Chapter 8: Vehicle and Other Major Purchases Garman/Forgue Personal Finance Ninth Edition PPT slide program prepared by Amy Forgue and Ray Forgue."— Presentation transcript:

1 Chapter 8: Vehicle and Other Major Purchases Garman/Forgue Personal Finance Ninth Edition PPT slide program prepared by Amy Forgue and Ray Forgue.

2 Copyright ©Houghton Mifflin Company. All rights reserved Learning Objectives 1.Explain the three steps in the planned buying process that occur prior to interacting with sellers. 2.Describe the five aspects of major purchases that require comparison shopping.

3 Copyright ©Houghton Mifflin Company. All rights reserved Learning Objectives 3.Negotiate and decide effective when making major purchases. 4.Evaluate your purchase decisions and, if necessary, effectively seek redress.

4 Copyright ©Houghton Mifflin Company. All rights reserved Do Your Homework What do you really want? –Need –Want –Impulse Buying –Generic Products

5 Copyright ©Houghton Mifflin Company. All rights reserved How To Buy Smart Become an expert Preshopping Research: Gathering information before actually beginning to interact with sellers.

6 Copyright ©Houghton Mifflin Company. All rights reserved How To Buy Smart What price should you expect to pay? –Manufacturers Suggested Retail Price (or MSRP): The suggested initial asking price. –Dealer Sticker Price: Includes additional charges tacked on by the dealer.

7 Copyright ©Houghton Mifflin Company. All rights reserved How To Buy Smart What is a fair interest rate? Loan preapproval

8 Copyright ©Houghton Mifflin Company. All rights reserved How To Buy Smart Is a rebate available? Rebate: A partial refund of a purchase price offered as an inducement to buy.

9 Copyright ©Houghton Mifflin Company. All rights reserved How To Buy Smart What is my trade-in worth? Can I afford it?

10 Copyright ©Houghton Mifflin Company. All rights reserved How To Buy Smart Use comparison shopping to find the best buy. –Comparison Shopping –Best Buy Compare prices.

11 Copyright ©Houghton Mifflin Company. All rights reserved How To Buy Smart Compare financing options. Consider leasing instead of buying. –Leasing: Renting a product while the ownership title remains with the lease grantor.

12 Copyright ©Houghton Mifflin Company. All rights reserved Leasing Terminology Open-end lease Closed-end lease (or walkaway lease)

13 Copyright ©Houghton Mifflin Company. All rights reserved Leasing Terminology Additional leasing fees: –Disposition fee –Early termination charge –Early termination payoff

14 Copyright ©Houghton Mifflin Company. All rights reserved Compare Warranties Warranty Implied Warranty Express Warranties Full Warranty Extended warranties are overpriced!

15 Copyright ©Houghton Mifflin Company. All rights reserved Negotiation Negotiating (or haggling) Negotiate effectively and decide at home. Successful negotiators are armed with information.

16 Copyright ©Houghton Mifflin Company. All rights reserved Negotiation Negotiate your price. –New-Vehicle Buying Service –Professional Shoppers –Invoice Price (or Sellers Cost) –Dealer Holdback (or Dealer Rebate)

17 Copyright ©Houghton Mifflin Company. All rights reserved Negotiation Negotiate your interest rate. –Get a firm price for the vehicle. –Negotiate the lowest possible APR through the dealer. Borrow elsewhere if the rate is lower. –Obtain a firm commitment on a trade-in allowance. Sell the vehicle yourself if the allowance is too low.

18 Copyright ©Houghton Mifflin Company. All rights reserved Negotiation Negotiate your trade-in. –High-Balling

19 Copyright ©Houghton Mifflin Company. All rights reserved Make the Decision Finalizing a car deal. –Low-balling –Buyers order

20 Copyright ©Houghton Mifflin Company. All rights reserved Evaluate Your Decision Redress Alternative Dispute Resolution Programs Mediation Lemon Laws Small-Claims Court

21 Copyright ©Houghton Mifflin Company. All rights reserved The Top 3 Financial Missteps In Big-Ticket Purchases People slip up in when they do the following: 1. Rely upon the seller as their source of information for price, financial terms, and trade-in value. 2. Tell a seller what they can afford to pay so the seller can avoid disclosing his or her lowest price. 3. Dont complain when products fail to perform as expected.

22 Copyright ©Houghton Mifflin Company. All rights reserved Good Money Habits in Vehicle and Other Major Purchases Think through all of your major purchases using the planned buying process. When planning to buy vehicles, check repair ratings history in the April issue of Consumer Reports magazine.

23 Copyright ©Houghton Mifflin Company. All rights reserved Good Money Habits in Vehicle and Other Major Purchases Purchase late-model, high-quality used vehicles and check their ownership history at and recall history at Obtain price information from at least three sources and aggressively negotiate prices and financing terms for major purchases.

24 Copyright ©Houghton Mifflin Company. All rights reserved Good Money Habits in Vehicle and Other Major Purchases Never tell a seller what payment you can afford. Promptly and firmly seek redress when dissatisfied with purchases or services.


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