Ch 8 Consumer Purchasing Strategies & Legal Protection
Tuesday, March 31, 2026 11:01 AM
Consumer buying Activities
- Financial Implications of Consumer Decisions
○ Buying influences & wise spending strategies
Economic Factors Social Factors Personal Factors
- Inflation - Lifestyle - Gender
- Interest Rates - Interests - Age
- Govt regulations - Hobbies - Occupation
- Product Safety - Peer Groups - Income
- Culture - Education
- Advertising - Marital Status
- Media - Family Size
Consumer Buying Activities
• Involve daily purchases & major household expenditures
The Use of Wise Purchasing Strategies
Timing of Purchase Brand Label, Packaging Price Warranties
Purchase Locations Comparison Information Comparison
Can Result to
§ Appropriate Spending Patterns
§ Avoiding the over use of credit
§ Achieving both goals & long term financial security
When making these decisions consider opportunity costs to maximize satisfaction, commonly
overlooked trade offs are:
- Paying more over time when buying credit for an item needed now
- Buying unknown, possibly low quality brands that are less expensive
- Buying online to save time & money but difficult to return, replace and/or repair
- Taking time & effort to comparison shop, save money & obtain a better after sale deal
All these decisions show your personality, life situation, values & goals
Wise Purchasing Strategies
- Comparison Shopping
○ The process of evaluating alternative stores, brands & prices
- Impulse Buying
○ An unplanned purchase/s that can lead to financial problems
○ Psychological factors include
§ Feeling overwhelming compulsions to buy things
§ Do you buy things to change your mood?
§ Do these shopping habits affect your relationships?
§ Is the amount spent damaging to your finances?
- How to avoid Impulse Buying
○ Timing Purchase
§ When certain items go on sale a certain time of year, the best option is to look
during the off season of said product
§ You can save money by buying items after the holiday season when the date of
sales height has passed (i.e. buying candy 2/15)
§ Weather reports can also help
□ Crop failures lead to higher prices in food
□ Economic/Political conflicts lead to reduced supplies or higher prices on
certain items
® as of 3/31/2026 the war w/ Iran has raised the prices of gas for cars,
plastic goods, groceries (which didn’t recover from the 2020 covid
pandemic), shipping & delivery costs, air travel & tourism
○ Purchase Location
§ A lesser known useful shopping tool is ‘cooperative’, a non profit whose members
save money on various products & services
□ Food Cooperatives are similar in buying in bulk at stores like Costco
□ Cooperatives can also be used in the forms of childcare, to purchase
recreational equipment, health care, cable tv & burial services
□ Buying at bargain stores can work, but certain foods might be expired, similar
brands might be more expensive & some products may even be faulty &
unsafe for use or consumption
○ Brand Comparison
§ Food & other products are available in various brands, like national name brands
(I.E. Honey Nut Cheerios, Starbucks, Kellogg etc) that offer a consistency in quality
§ Store-brand, private label aka generic company brand are sold by the store, low
cost & similar alternatives to the name brands
□ Target brand up&up home cleaning supplies vs Clorox
□ Walmart brand great value, Smart&Final brand First Street etc
○ Label Information
§ Some info on brand vs store brand is helpful, other information is mostly
promotional
§ Federal law requires that food labels contain company name, address, nutritional
info, ingredients & food allergy warnings
§ Open Dating
□ Describes the freshness/shelf life of a perishable item
○ Price Comparison
§ Unit pricing
□ A standard unit of measurement to compare the price of packages of
different sizes
□ To calculate price $ divided by units of measurement (oz, lbs etc)
i.e. $8. cents per ounce = 0.13 cents/ounce
○ A rebate
§ A partial refund of the price of a product
Warranties
○ A written guarantee from the manufacturer or distributor that specifies the conditions
of when/how/why a product can be returned/replaced/repaired
- Express Warranty
○ Usually in written form, created by the seller/manufacturer and has two parts, limited
& full
§ Full warranty
□ states that a defective product can be fixed or replaced during a reasonable
amount of time
§ Limited warranty
□ covers only certain aspects of the products like replacing parts and/or
requires the customer buy the parts in order to replace them as a service
§ Implied warranty
□ Covers a products intended use or basic functions of the product that are not
specifically written, but they can vary from state to state
§ Warranty of Title
□ A seller has the right to sell the product purchased
§ Warranty of Merchantability
□ Guarantees the product is fit for normal use as intended
Used Car Warranties
- The Federal Trade Commission (FTC) requires businesses that sell used cars place a buyers
guide sticker in the window as disclosure during the sale, it must also state if the care has a
warranty & what protections are provided
- If there is no warranty, the seller hold no responsibility, you are required to pay for any
repairs & be sure to get any promises made about the vehicle in writing
○ The buyers guide required by the FTC encourages the following:
§ Have the car inspected by a mechanic
§ Be sure to have the promise of any deal in writing from the seller
§ You must have a list of all 14 major systems of the vehicle
New Car Warranties
- Provide buyer w/ an assurance of quality
- Vary in time, mileage & parts covered
- The Main conditions of a warranty include
○ Coverage of basic parts against defects
○ Power train coverage of engine, transmission & drive train (all basic parts that keep
the car functioning)
Service contracts
- Agreements between a business & customer to cover repairs & costs of a product
○ AKA extended Warrenties
- For a fee these can protect the buyer from high costs of certain repairs & losses
- Car contracts cover repairs that are only included for the manufacturers warranty & prices
can range from $800-$1,500
○ Contracts don’t always have engine cooling systems
Major Consumer Purchases: Buying Motor Vehicles
Phase 1 Pre-shopping Activities
○ Problem Identification & Gather info
§ You need transportation
○ Info Gathering
§ Personal Contacts
□ Friends, Family, professional contacts etc
§ Business Organizations
□ Ads, product labels, ingredients, quality
§ Media Sources
□ TV, Radio, newspapers, magazines, websites, apps
§ Independent Testing Organization
□ Like Unions, products quality reports, test report for safety
§ Govt Agencies
□ At local, state & federal levels, provides info, complaint handling &
educational programs
Phase 2 - Evaluating Alternatives
○ Selecting Vehicle Options
§ Mechanical Devices - To improve performances like a larger engine
§ Convenience Options - Power seats, AC, sound systems, power locks & tinted
glass
§ Aesthetic Features - Vehicle visual appeal
§ (FCW) Forward Collision - Warning systems that alerts drivers of a potential crash
§ (AEB) Automatic Emergency Break - Sense potential collisions & begins braking &
blind-spot warnings
§ (ACC) Adaptive Cruise Control - Adjusts vehicle speed based on traffic conditions
§ (LKA) Lane Keeping Assistance & (LDW) Land-Departure Warning - Offer sight
steering adjustment & warnings
○ Comparing Used Vehicles
§ Post pandemic lead to an increased demand & higher prices on cars, that most
people avoid if possible via public transit or ride share apps
§ Used cars include:
□ Car dealers that sell older models that might have a warranty
□ Warranties if available are limited & lower prices if available
□ If your selling your car you can bargain the selling prices as long as the car is
well maintained
□ Used car companies such as CarMax tend to have a larger inventory,
Carvana.com & Autotrader.com are also other websites to look at
○ CPO
§ Certified Pre Owned vehicles go through deep inspections & were created to
increase demand for low mileage vehicles
- Leasing a Motor Vehicle
○ A contracted agreement w/ monthly payments for a set period of time usually 3-5 yrs
○ The main advantages to leasing include:
§ Small cash deposits
§ Smaller monthly lease payments that are financed
§ The lease agreement provides details for business
§ An ability to secure expensive vehicles for a shorter period to obtain a new vehicle
more often
- Drawbacks of Leasing
○ No ownership interest in the car
○ A need to meet requirements for qualifying credit
○ Possible additional costs for extra mileage, returning the car early or even moving to
another state
- Leasing Costs
○ Capitalized Costs - The price of the vehicle, buyer pay about 92% of the listed price
○ The Money Factor - When the interest rate is being paid on the capitol
○ Monthly & number/amount of monthly payments
○ The Residual Value - The expected value of the vehicle at the end of the lease
○ At the end of a lease you can return, keep or sell the vehicle
Phase 3 - Determining Purchase Price
- Negotiation factors to consider
○ Having all the necessary info about the product & buying situation
○ Dealing w/ a person who has the authority to give you a lower price and/or additional
feature
- Used Car Price Negotiation
○ Websites to visit are www.edmunds.com & Kelly Blue Book www.kbb.com
○ Factors that can influence the price of the car:
§ Miles on the car
□ A low mileage car has a higher selling price
□ The vehicle condition & demand for the model
- Price Bargaining for new cars
○ New Car “Sticker Price”
§ Sticker price is the suggested retail price printed on the label, it represents the
base price of the car w/ the cost of added features
○ Dealers Cost AKA the “Invoice Price”
§ An amount less than the sticker price, is available during negotiating the price
○ Set Price Dealers
§ Dont haggle, these prices are either accepted or rejected as is
○ Car Buying Services
§ Help buyer obtain a specific vehicle at a reasonable price aka Auto Brokers,
they’re services are to help buy a car ranging from $50-$200
○ Other questionable sales techniques
§ Lowballing
□ When you are quoted a low price that increases w/ add on costs that are
included last minuet
§ Highballing
□ When your offered a high amount trade in value of a car w/ the amount
made up by increasing the value of the new car
§ Be sure to know the payments per month, for how many months & that you can
afford it
§ Never make a deposit w/o being sure of the purchase
§ Hidden costs may have been added in to get the dealer prices covered
§ Be aware of sales agreements w/ pre-printed amounts, cross out number that are
not appropriate
§ Studies have shown that Sundays & Tuesdays are the best days to buy a new car,
Thursdays are the words
□ The best deals are usually near the end of the month, New years, Labor Day
& Black Friday, but know that inventory is limited
Comparing Financial Alternatives
- You might pay cash but all new cars are financed in various way
○ An out loan through the bank, credit unions, consumer finance companies &
businesses
○ Lenders will pre approve you for a certain loan amount which doesn’t allow you to
negotiate the price of the car
○ The lowest interest rate/lowest payment doesn’t mean it’s the best financing option
§ Negative Equity and/or An upside-down situation
□ Consider the loan length in years, how much you will owe & if the cars value
will depreciate
○ Car manufacturers can offer rebates, lower interest financing plans and/or a lower
loan interest plan
§ Some special rebates apply to teachers, veterans, credit union members & real
estate agents
Phase 4 - Post Purchase Activities
- The Lemon Law
○ A vehicle must be refunded after the owner has made repeated attempts to a
resolution to maintenance issues as follows
§ after 4 attempts have been made to have the same issue corrected
§ the vehicle has been out of service for over 30 days within 12 months of purchase
§ Issues with the vehicle within the first 12,000 miles
○ Details per state can be verified at www.lemonlawamerican.com
- Automotive Operations Costs
○ Over a lifetime its estimated that one will spend over $200,000 on car related
expenses
Fixed Ownerships Costs Variable Operational Costs
Depreciation Gas & Oil
Interest on car loans Tires
Insurance Maintenance & repairs
License, registration, taxes & fees Parking & tolls
- Depreciation
○ The loss of value in a vehicle over time & use
○ Well maintained cars & certain high value models depreciate slower
○ Costs like gas, oil & tires increase w/ the amount of miles driven
○ Try to keep records of regular expenses like gas, oil changes, parking & tolls
§ There apps available like Fuelly for Android & Fuelly for IPhone
○ Keep files of maintence, repairs, replacement parts, insurance, license & registration
fees
Automobile Servicing Sources
- Car dealers have departments w/ a wide range of services but the cost at car dealers is
usually much higher than other options that are available
- Independent auto shops offer competitive prices, quality can vary so recommendations
based from online & other customers is best
- Mass retailer emphasize the sale of tires & batteries along side their services for brakes, oil
changes & tune ups
- Specialty shops offer brake, tire, transmission & oil changes
○ AVOID
§ Common repair frauds
§ Be sure to get a written detailed outline of service to be performed in advance
Resolving Consumer Complaints
- Beware of these common & not so common frauds
○ Pandemic Cons
§ Faulty tests, fake charities to fund a cure, false jobs advertising work from home
○ Foreign Scams
§ Fake emails & letter claiming to be a bank promising money or offering an
investment
○ Disaster related fraud
§ Scams that occur during/after a natural disaster like a hurricane or wildfire that
solicit funds claiming to go to help w/ resources
○ Credit Repair
§ Companies that offer to clean your credit/raise your score, you really end up
paying thousands for their services & your score it not affected
○ Crowdfunding Scams
§ Avoid funding products that are already on the market, do an online research to
determine the validity of request for the product if its needed
○ Fraudulent Diet Products & Health Claims
§ Claims like slim fast, claiming to have found a “scientific breakthrough”, a “secret
ingredient”
○ Romance Scams
§ Target singles older individuals, they can happen both online/in person and
usually ask for credit info, bank info, access to assets in order to receive payment
○ Scholarship & Financial Aid Scams
§ The FTC warns college students to avoid “scholarship guaranteed” “you’re been
selected by the FTC awards” types of scams - these can also be reviewed in ch 7
○ Phishing
§ Software and/or emails the place viruses on your computer/server, even if the
web address is correct the software its self can be bogus/faulty
○ The “Yes” Scam
§ These types of scams require a voice authentication of you saying the word yes,
later you can be billed what seems as a valid transaction & will begin to receive
what is known as a “one ring” scam, these happen when you are called the phone
rings once & you call back BUT you maybe charged $15-30 a call
○ Fake Checks
§ As tech advances these are less likely to happen but you can still search for what
to be aware of at www.consumer.ftc.gov
○ Payment & Scams
§ Frauds often request payment via gift card, wire transfer, crypto, money transfer
etc, to verify and learn more visit www.fraud.org, www.aarp.org/money/scams-
fraud/tracking-map/
- How to resolve the problem
1. Initial communication
i. Submitting a formal complaint at the building of said business is usually best if
possible since most business want to be perceived in a good standing w/ the
public
2. Communication w/ the company
i. Via email, phone number of said company & websites info can be found online
and on product packaging
3. Consumer Agency Assistance
i. The better business bureau may be able to better assist you to help resolve
complaints
1) Mediation - Involves the use of 3rd parties to solve grievances, a 3rd part or
person tries to resolve the conflict between business & customer
2) Arbitration - The settlement of the difference of a 3rd party whose final
decision is legally binding
4. Legal Action
- Small claim court
• Where a person can file a claim involving amounts between $500-$25,000, this
process can be done w/o a lawyer
- Class action suit
• Legal action taken by few individuals on behalf of others who have suffered an
alleged injustice
- Using a lawyer
• When selecting your lawyer consider their experience
□ Legal Aid Society - A network of publicly supported law offices providing legal
assistance to those who can’t afford an attorney
Other Legal Alternatives
- Prepaid legal services can provide unlimited or reduced fee legal assistance
• Some provide basic services like phone consultations, prep of a will and fee’s
range $50-100
• Websites include Legal Zoom Nolo & Rocket Lawyer
Personal Consumer Protections
- To avoid becoming a victim of malpractice (faulty/illegal methods):
• Do business w/ a reputable company
• Understand contracts & other documents you sign, if is too good to be true it probably
is
• Beware websites that that don’t end in .com, .gov and/or .org
• Compare prices through a bank between credit & financing
• Avoid impulse buying, scam artists will tell you they’re having a sale on services that
end soon
• WAIT & THINK before making a final decision
Tuesday, March 31, 2026 11:01 AM
Consumer buying Activities
- Financial Implications of Consumer Decisions
○ Buying influences & wise spending strategies
Economic Factors Social Factors Personal Factors
- Inflation - Lifestyle - Gender
- Interest Rates - Interests - Age
- Govt regulations - Hobbies - Occupation
- Product Safety - Peer Groups - Income
- Culture - Education
- Advertising - Marital Status
- Media - Family Size
Consumer Buying Activities
• Involve daily purchases & major household expenditures
The Use of Wise Purchasing Strategies
Timing of Purchase Brand Label, Packaging Price Warranties
Purchase Locations Comparison Information Comparison
Can Result to
§ Appropriate Spending Patterns
§ Avoiding the over use of credit
§ Achieving both goals & long term financial security
When making these decisions consider opportunity costs to maximize satisfaction, commonly
overlooked trade offs are:
- Paying more over time when buying credit for an item needed now
- Buying unknown, possibly low quality brands that are less expensive
- Buying online to save time & money but difficult to return, replace and/or repair
- Taking time & effort to comparison shop, save money & obtain a better after sale deal
All these decisions show your personality, life situation, values & goals
Wise Purchasing Strategies
- Comparison Shopping
○ The process of evaluating alternative stores, brands & prices
- Impulse Buying
○ An unplanned purchase/s that can lead to financial problems
○ Psychological factors include
§ Feeling overwhelming compulsions to buy things
§ Do you buy things to change your mood?
§ Do these shopping habits affect your relationships?
§ Is the amount spent damaging to your finances?
- How to avoid Impulse Buying
○ Timing Purchase
§ When certain items go on sale a certain time of year, the best option is to look
during the off season of said product
§ You can save money by buying items after the holiday season when the date of
sales height has passed (i.e. buying candy 2/15)
§ Weather reports can also help
□ Crop failures lead to higher prices in food
□ Economic/Political conflicts lead to reduced supplies or higher prices on
certain items
® as of 3/31/2026 the war w/ Iran has raised the prices of gas for cars,
plastic goods, groceries (which didn’t recover from the 2020 covid
pandemic), shipping & delivery costs, air travel & tourism
○ Purchase Location
§ A lesser known useful shopping tool is ‘cooperative’, a non profit whose members
save money on various products & services
□ Food Cooperatives are similar in buying in bulk at stores like Costco
□ Cooperatives can also be used in the forms of childcare, to purchase
recreational equipment, health care, cable tv & burial services
□ Buying at bargain stores can work, but certain foods might be expired, similar
brands might be more expensive & some products may even be faulty &
unsafe for use or consumption
○ Brand Comparison
§ Food & other products are available in various brands, like national name brands
(I.E. Honey Nut Cheerios, Starbucks, Kellogg etc) that offer a consistency in quality
§ Store-brand, private label aka generic company brand are sold by the store, low
cost & similar alternatives to the name brands
□ Target brand up&up home cleaning supplies vs Clorox
□ Walmart brand great value, Smart&Final brand First Street etc
○ Label Information
§ Some info on brand vs store brand is helpful, other information is mostly
promotional
§ Federal law requires that food labels contain company name, address, nutritional
info, ingredients & food allergy warnings
§ Open Dating
□ Describes the freshness/shelf life of a perishable item
○ Price Comparison
§ Unit pricing
□ A standard unit of measurement to compare the price of packages of
different sizes
□ To calculate price $ divided by units of measurement (oz, lbs etc)
i.e. $8. cents per ounce = 0.13 cents/ounce
○ A rebate
§ A partial refund of the price of a product
Warranties
○ A written guarantee from the manufacturer or distributor that specifies the conditions
of when/how/why a product can be returned/replaced/repaired
- Express Warranty
○ Usually in written form, created by the seller/manufacturer and has two parts, limited
& full
§ Full warranty
□ states that a defective product can be fixed or replaced during a reasonable
amount of time
§ Limited warranty
□ covers only certain aspects of the products like replacing parts and/or
requires the customer buy the parts in order to replace them as a service
§ Implied warranty
□ Covers a products intended use or basic functions of the product that are not
specifically written, but they can vary from state to state
§ Warranty of Title
□ A seller has the right to sell the product purchased
§ Warranty of Merchantability
□ Guarantees the product is fit for normal use as intended
Used Car Warranties
- The Federal Trade Commission (FTC) requires businesses that sell used cars place a buyers
guide sticker in the window as disclosure during the sale, it must also state if the care has a
warranty & what protections are provided
- If there is no warranty, the seller hold no responsibility, you are required to pay for any
repairs & be sure to get any promises made about the vehicle in writing
○ The buyers guide required by the FTC encourages the following:
§ Have the car inspected by a mechanic
§ Be sure to have the promise of any deal in writing from the seller
§ You must have a list of all 14 major systems of the vehicle
New Car Warranties
- Provide buyer w/ an assurance of quality
- Vary in time, mileage & parts covered
- The Main conditions of a warranty include
○ Coverage of basic parts against defects
○ Power train coverage of engine, transmission & drive train (all basic parts that keep
the car functioning)
Service contracts
- Agreements between a business & customer to cover repairs & costs of a product
○ AKA extended Warrenties
- For a fee these can protect the buyer from high costs of certain repairs & losses
- Car contracts cover repairs that are only included for the manufacturers warranty & prices
can range from $800-$1,500
○ Contracts don’t always have engine cooling systems
Major Consumer Purchases: Buying Motor Vehicles
Phase 1 Pre-shopping Activities
○ Problem Identification & Gather info
§ You need transportation
○ Info Gathering
§ Personal Contacts
□ Friends, Family, professional contacts etc
§ Business Organizations
□ Ads, product labels, ingredients, quality
§ Media Sources
□ TV, Radio, newspapers, magazines, websites, apps
§ Independent Testing Organization
□ Like Unions, products quality reports, test report for safety
§ Govt Agencies
□ At local, state & federal levels, provides info, complaint handling &
educational programs
Phase 2 - Evaluating Alternatives
○ Selecting Vehicle Options
§ Mechanical Devices - To improve performances like a larger engine
§ Convenience Options - Power seats, AC, sound systems, power locks & tinted
glass
§ Aesthetic Features - Vehicle visual appeal
§ (FCW) Forward Collision - Warning systems that alerts drivers of a potential crash
§ (AEB) Automatic Emergency Break - Sense potential collisions & begins braking &
blind-spot warnings
§ (ACC) Adaptive Cruise Control - Adjusts vehicle speed based on traffic conditions
§ (LKA) Lane Keeping Assistance & (LDW) Land-Departure Warning - Offer sight
steering adjustment & warnings
○ Comparing Used Vehicles
§ Post pandemic lead to an increased demand & higher prices on cars, that most
people avoid if possible via public transit or ride share apps
§ Used cars include:
□ Car dealers that sell older models that might have a warranty
□ Warranties if available are limited & lower prices if available
□ If your selling your car you can bargain the selling prices as long as the car is
well maintained
□ Used car companies such as CarMax tend to have a larger inventory,
Carvana.com & Autotrader.com are also other websites to look at
○ CPO
§ Certified Pre Owned vehicles go through deep inspections & were created to
increase demand for low mileage vehicles
- Leasing a Motor Vehicle
○ A contracted agreement w/ monthly payments for a set period of time usually 3-5 yrs
○ The main advantages to leasing include:
§ Small cash deposits
§ Smaller monthly lease payments that are financed
§ The lease agreement provides details for business
§ An ability to secure expensive vehicles for a shorter period to obtain a new vehicle
more often
- Drawbacks of Leasing
○ No ownership interest in the car
○ A need to meet requirements for qualifying credit
○ Possible additional costs for extra mileage, returning the car early or even moving to
another state
- Leasing Costs
○ Capitalized Costs - The price of the vehicle, buyer pay about 92% of the listed price
○ The Money Factor - When the interest rate is being paid on the capitol
○ Monthly & number/amount of monthly payments
○ The Residual Value - The expected value of the vehicle at the end of the lease
○ At the end of a lease you can return, keep or sell the vehicle
Phase 3 - Determining Purchase Price
- Negotiation factors to consider
○ Having all the necessary info about the product & buying situation
○ Dealing w/ a person who has the authority to give you a lower price and/or additional
feature
- Used Car Price Negotiation
○ Websites to visit are www.edmunds.com & Kelly Blue Book www.kbb.com
○ Factors that can influence the price of the car:
§ Miles on the car
□ A low mileage car has a higher selling price
□ The vehicle condition & demand for the model
- Price Bargaining for new cars
○ New Car “Sticker Price”
§ Sticker price is the suggested retail price printed on the label, it represents the
base price of the car w/ the cost of added features
○ Dealers Cost AKA the “Invoice Price”
§ An amount less than the sticker price, is available during negotiating the price
○ Set Price Dealers
§ Dont haggle, these prices are either accepted or rejected as is
○ Car Buying Services
§ Help buyer obtain a specific vehicle at a reasonable price aka Auto Brokers,
they’re services are to help buy a car ranging from $50-$200
○ Other questionable sales techniques
§ Lowballing
□ When you are quoted a low price that increases w/ add on costs that are
included last minuet
§ Highballing
□ When your offered a high amount trade in value of a car w/ the amount
made up by increasing the value of the new car
§ Be sure to know the payments per month, for how many months & that you can
afford it
§ Never make a deposit w/o being sure of the purchase
§ Hidden costs may have been added in to get the dealer prices covered
§ Be aware of sales agreements w/ pre-printed amounts, cross out number that are
not appropriate
§ Studies have shown that Sundays & Tuesdays are the best days to buy a new car,
Thursdays are the words
□ The best deals are usually near the end of the month, New years, Labor Day
& Black Friday, but know that inventory is limited
Comparing Financial Alternatives
- You might pay cash but all new cars are financed in various way
○ An out loan through the bank, credit unions, consumer finance companies &
businesses
○ Lenders will pre approve you for a certain loan amount which doesn’t allow you to
negotiate the price of the car
○ The lowest interest rate/lowest payment doesn’t mean it’s the best financing option
§ Negative Equity and/or An upside-down situation
□ Consider the loan length in years, how much you will owe & if the cars value
will depreciate
○ Car manufacturers can offer rebates, lower interest financing plans and/or a lower
loan interest plan
§ Some special rebates apply to teachers, veterans, credit union members & real
estate agents
Phase 4 - Post Purchase Activities
- The Lemon Law
○ A vehicle must be refunded after the owner has made repeated attempts to a
resolution to maintenance issues as follows
§ after 4 attempts have been made to have the same issue corrected
§ the vehicle has been out of service for over 30 days within 12 months of purchase
§ Issues with the vehicle within the first 12,000 miles
○ Details per state can be verified at www.lemonlawamerican.com
- Automotive Operations Costs
○ Over a lifetime its estimated that one will spend over $200,000 on car related
expenses
Fixed Ownerships Costs Variable Operational Costs
Depreciation Gas & Oil
Interest on car loans Tires
Insurance Maintenance & repairs
License, registration, taxes & fees Parking & tolls
- Depreciation
○ The loss of value in a vehicle over time & use
○ Well maintained cars & certain high value models depreciate slower
○ Costs like gas, oil & tires increase w/ the amount of miles driven
○ Try to keep records of regular expenses like gas, oil changes, parking & tolls
§ There apps available like Fuelly for Android & Fuelly for IPhone
○ Keep files of maintence, repairs, replacement parts, insurance, license & registration
fees
Automobile Servicing Sources
- Car dealers have departments w/ a wide range of services but the cost at car dealers is
usually much higher than other options that are available
- Independent auto shops offer competitive prices, quality can vary so recommendations
based from online & other customers is best
- Mass retailer emphasize the sale of tires & batteries along side their services for brakes, oil
changes & tune ups
- Specialty shops offer brake, tire, transmission & oil changes
○ AVOID
§ Common repair frauds
§ Be sure to get a written detailed outline of service to be performed in advance
Resolving Consumer Complaints
- Beware of these common & not so common frauds
○ Pandemic Cons
§ Faulty tests, fake charities to fund a cure, false jobs advertising work from home
○ Foreign Scams
§ Fake emails & letter claiming to be a bank promising money or offering an
investment
○ Disaster related fraud
§ Scams that occur during/after a natural disaster like a hurricane or wildfire that
solicit funds claiming to go to help w/ resources
○ Credit Repair
§ Companies that offer to clean your credit/raise your score, you really end up
paying thousands for their services & your score it not affected
○ Crowdfunding Scams
§ Avoid funding products that are already on the market, do an online research to
determine the validity of request for the product if its needed
○ Fraudulent Diet Products & Health Claims
§ Claims like slim fast, claiming to have found a “scientific breakthrough”, a “secret
ingredient”
○ Romance Scams
§ Target singles older individuals, they can happen both online/in person and
usually ask for credit info, bank info, access to assets in order to receive payment
○ Scholarship & Financial Aid Scams
§ The FTC warns college students to avoid “scholarship guaranteed” “you’re been
selected by the FTC awards” types of scams - these can also be reviewed in ch 7
○ Phishing
§ Software and/or emails the place viruses on your computer/server, even if the
web address is correct the software its self can be bogus/faulty
○ The “Yes” Scam
§ These types of scams require a voice authentication of you saying the word yes,
later you can be billed what seems as a valid transaction & will begin to receive
what is known as a “one ring” scam, these happen when you are called the phone
rings once & you call back BUT you maybe charged $15-30 a call
○ Fake Checks
§ As tech advances these are less likely to happen but you can still search for what
to be aware of at www.consumer.ftc.gov
○ Payment & Scams
§ Frauds often request payment via gift card, wire transfer, crypto, money transfer
etc, to verify and learn more visit www.fraud.org, www.aarp.org/money/scams-
fraud/tracking-map/
- How to resolve the problem
1. Initial communication
i. Submitting a formal complaint at the building of said business is usually best if
possible since most business want to be perceived in a good standing w/ the
public
2. Communication w/ the company
i. Via email, phone number of said company & websites info can be found online
and on product packaging
3. Consumer Agency Assistance
i. The better business bureau may be able to better assist you to help resolve
complaints
1) Mediation - Involves the use of 3rd parties to solve grievances, a 3rd part or
person tries to resolve the conflict between business & customer
2) Arbitration - The settlement of the difference of a 3rd party whose final
decision is legally binding
4. Legal Action
- Small claim court
• Where a person can file a claim involving amounts between $500-$25,000, this
process can be done w/o a lawyer
- Class action suit
• Legal action taken by few individuals on behalf of others who have suffered an
alleged injustice
- Using a lawyer
• When selecting your lawyer consider their experience
□ Legal Aid Society - A network of publicly supported law offices providing legal
assistance to those who can’t afford an attorney
Other Legal Alternatives
- Prepaid legal services can provide unlimited or reduced fee legal assistance
• Some provide basic services like phone consultations, prep of a will and fee’s
range $50-100
• Websites include Legal Zoom Nolo & Rocket Lawyer
Personal Consumer Protections
- To avoid becoming a victim of malpractice (faulty/illegal methods):
• Do business w/ a reputable company
• Understand contracts & other documents you sign, if is too good to be true it probably
is
• Beware websites that that don’t end in .com, .gov and/or .org
• Compare prices through a bank between credit & financing
• Avoid impulse buying, scam artists will tell you they’re having a sale on services that
end soon
• WAIT & THINK before making a final decision
