8 Section Outline Laws of Ownership Financing a Vehicle Buying a New VehicleTrade-In
9 Section Outline Leasing a New Vehicle Buying a Pre-Owned Vehicle Consumer Leasing ActBuying a Pre-Owned VehicleBuying from a DealerBuying from a Private PartyBuying from Rental Companies
10 Section Outline The Contract to Buy a Vehicle What to Do if You Buy a Defective CarFederal Consumer ProtectionOdometer ProtectionRepairing a Vehicle
11 Pre-Learning Question What laws do you think apply to buying a vehicle?
12 16.1Laws of OwnershipThe law that applies to the purchase of a vehicle comes from several sources.The Uniform Commercial CodeConsumer protection lawsLaws regulating credit
13 Pre-Learning Question What information should you have before you buy a vehicle using credit?
14 Financing a VehicleOne of the first steps in buying a car is to decide how much you can afford to pay.You can buy a carwith cashwith credit
15 Financing a VehicleFederal law requires lenders to disclose the finance charge and annual percentage rate (APR) to borrowers.
16 Financing a VehicleThe finance charge is the cost of the loan in dollars and cents.The annual percentage rate (APR) is the true interest rate of the loan.
17 What You Should Know Before You Buy The exact price you’re paying for the vehicleThe amount you’re financingThe finance charge
18 What You Should Know Before You Buy The APRThe number and amount of paymentsThe total sales price (the sum of the monthly payments plus the down payment)
19 What is the difference between the finance charge and annual percentage rate?
20 ANSWERThe finance charge is the dollar amount of the interest, and the APR is an interest rate.
21 Pre-Learning Question What steps should you take before buying a new vehicle?
22 Buying a New VehicleAfter deciding how much you can afford to pay for a car, when buying a new car you shouldlearn about the cars you may be interested inresearch pricing
23 Trade-InWhen buying a new car, do not discuss a trade-in with the dealer until you have negotiated the best price for your new car.
24 Trade-InYou should also know the value of your trade-in, which can be found on the Internet or in the library.
25 Pre-Learning Question How is leasing a vehicle different from buying one?
26 Leasing a New Vehicle The advantages to leasing a new vehicle are: low down paymentsmaller monthly payments
27 Leasing a New Vehicle The disadvantages to leasing a new vehicle are: most expensive way to acquire a carafter making a lot of payments, you end up with nothing to trade in toward your next vehicle
28 Consumer Leasing ActThe Consumer Leasing Act is a federal law requiring businesses to tell you about all of the terms of a lease of personal property.
29 Consumer Leasing ActThis information can be used to compare different leases or to compare the cost of leasing with the cost of buying.
30 Pre-Learning Question Where can you buy a pre-owned car?
31 Leasing a New Vehicle A pre-owned vehicle may be purchased from a new car dealera used car dealera car rental companya private party
32 Leasing a New VehicleSometimes banks and loan companies
33 Buying from a DealerA used car dealer may have a large selection of cars, but often does not maintain facilities to service the car after you buy it.
34 Buying from a DealerNew car dealers often sell used cars that they have taken in for trade and have service facilities.
35 Warranties When selling a vehicle, a dealer gives an implied warranty that the vehicle is merchantable, unless this warranty is excluded.often gives a 30-, 60-, or 90-day guarantee.
36 The Used Car RuleThe FTC’s Used Car Rule requires all used car dealers to place a large sticker, called a Buyer’s Guide, in the window of each used vehicle they offer for sale.
37 The Used Car RuleThe guide explains any specific warranty protection that is provided and also states whether there isno warranty,an “as is” warranty, oran implied warranty.
38 Buying from a Private Party The advantage to buying from a private party is that the prices are lower, but there are disadvantages, as well.no implied warranty of merchantabilityno recourse if something goes wrong
39 Buying from a Private Party Another disadvantage is that the car might be stolen.In this case, a bank or loan company may have the right to repossess, or take back, the car, regardless of who presently owns it.
40 Buying from a Private Party Before you buy from a private party, be sure to:test-drive the vehicleask for the vehicle’s maintenance recordtalk to previous ownersask to see the certificate of title
41 Buying from Rental Companies Advantages:are usually only a year or two oldcan be good buysusually have had regular maintenancecome with warranties
42 Buying from Rental Companies Disadvantages:have probably had heavy usehave high mileage
43 Pre-Learning Question What form should a contract to buy a vehicle take?
44 The Contract to Buy a Vehicle Under the UCC, a contract for the sale of goods valued at $500 or more must be in writing to be enforceable.
45 The Contract to Buy a Vehicle When private parties enter into a contract, they can simply write on a piece of paper that one party agrees to sell and the other party agrees to buy the vehicle.
46 The Contract to Buy a Vehicle The contract between private parties must also identify the vehicle and be signed by the seller.
47 The Contract to Buy a Vehicle When a contract is entered into between a private party and a dealer, the private party is usually at a disadvantage.The dealer asks the buyer to sign a printed form.
48 The Contract to Buy a Vehicle A sentence on the front of the form says that the buyer agrees to the terms on the reverse side.The back of the form contains a full page of small-print terms that favor the seller.
49 The Contract to Buy a Vehicle Such a standard-form contract is called an adhesion contract.Smart buyers read the small print and cross out items with which they disagree.
50 What to Do if You Buy a Defective Car If you buy a car that continuously has mechanical problems, you should notify the seller immediately.
51 What to Do if You Buy a Defective Car The seller can be asked tofix the problempay to have the vehicle fixedgive you your money back
52 Revoking the Acceptance If you buy a car that doesn’t conform to the contract, you may be able to revoke your acceptance, even after taking possession of the vehicle.
53 Revoking the Acceptance This revocation is allowed under the UCC if the defect is serious and undetectable.It must be made within a reasonable time after the defect is discovered.
54 Notifying the Seller about Defects Buyers must notify sellers of defects in vehicles within a reasonable time after the purchase.If you fail to do so, you may lose the right to recover.
55 State Lemon LawsMany states have passed “lemon laws” to protect consumers when they buy defective vehicles, either new or used.
56 State Lemon LawsA “lemon” is defined in one state as “a substantially defective new car that has been at a dealer’s three times for the repair of the same defect or any combination of defects.”
58 ANSWERAnswers include a new car dealer, a used car dealer, a car rental company, or a private party.
59 Pre-Learning Question What federal laws help protect vehicle consumers?
60 Federal Consumer Protection The federal Motor Vehicle Information and Cost Savings Act has established bumper standards for passenger vehicles.The act also establishes average fuel economy standards.
61 Odometer ProtectionIt is illegal for a vehicle owner to turn back or disconnect the odometer, or mileage indicator, of a vehicle.
62 Odometer ProtectionThe federal odometer law requires everyone who transfers a vehicle, unless it is more than 25 years old, to provide a written mileage disclosure statement.
63 Pre-Learning Question What state laws can help protect vehicle consumers?
64 Repairing a VehicleMany state laws require motor vehicle repair shops to be licensed and registered. Laws are being adopted in many states requiring:repair estimatesadvanced disclosure of pricesspecific training for mechanics
65 Repairing a VehicleSome states require automobile repair shops to be bonded.The bonding company is an insurer who must pay the consumer for losses suffered as a result of wrongdoing on the part of the repair shop.
66 Reviewing What You Learned Section AssessmentReviewing What You LearnedWhat six aspects of the loan agreement should you be sure you understand before you sign the loan documents?
67 Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswer(1) exact price (2) amount financed (3) finance charge (4) APR (5) number and amount of payments (6) total sales price
68 Reviewing What You Learned Section AssessmentReviewing What You LearnedWhat should you do before you buy a new car?
69 Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerDetermine how much you can afford; decide what car model/options you want; conduct research on pricing.
70 Reviewing What You Learned Section AssessmentReviewing What You LearnedDiscuss the advantages and disadvantages of leasing a car.
71 Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerAdvantages: low down payment, smaller monthly payments. Disadvantages: most expensive way to obtain a new car; after making payments, you own nothing and have nothing to trade in on your next vehicle.
72 Reviewing What You Learned Section AssessmentReviewing What You LearnedWhy might it be risky to purchase a pre-owned vehicle from a private party?
73 Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerPrivate parties do not give the implied warranty of merchantability. There is no recourse if something is wrong with it.
74 Reviewing What You Learned Section AssessmentReviewing What You LearnedWhat should you do if you buy a defective car?
75 Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerNotify the seller at once.
76 Reviewing What You Learned Section AssessmentReviewing What You LearnedWhat is the purpose of the federal odometer law?
77 Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerIt requires everyone who transfers a vehicle, unless it is over 25 years old, to give the transferee a written mileage disclosure statement.
78 Reviewing What You Learned Section AssessmentReviewing What You LearnedWhy do some states require auto repair shops to be bonded?
79 Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerThe bonding company acts as an insurer who must pay the consumer for losses if the repair shop causes damage.
80 Critical Thinking Activity Buyer’s Guide Section AssessmentCritical Thinking ActivityBuyer’s GuideVisit a used car dealer and read the Buyer’s Guides displayed on several of the cars. Decide whether you would be willing to purchase the cars based on the information provided in the Buyer’s Guides.
81 Critical Thinking Activity Answer Buyer’s Guide Section AssessmentCritical Thinking Activity AnswerBuyer’s GuideAnswers will vary depending on the Buyer’s Guides the students inspect.
82 Legal Skills in Action Automobile Warranties Section AssessmentLegal Skills in ActionAutomobile WarrantiesIn teams of four, contact three automobile dealerships or car rental companies that sell used cars. Ask about the warranties they provide on the used cars they sell.
83 Legal Skills in Action Automobile Warranties Section AssessmentLegal Skills in ActionAutomobile WarrantiesMake sure you find out if the warranties cover both parts and labor. Next, as a group, come to consensus as to which warranty is best.
84 Legal Skills in Action Answer Section AssessmentLegal Skills in Action AnswerAutomobile WarrantiesAnswers will vary but should include a comparison of the different warranties located by the groups.