1 / 7

CHAPTER 8 VEHICLES AND OTHER MAJOR PURCHASES

CHAPTER 8 VEHICLES AND OTHER MAJOR PURCHASES. FIN 235 SPRING 2013. I. LEARNING OBJECTIVES. Steps in the planned buying process The process of comparison shopping Negotiate and decide effectively when making major purchases Use effective complaint procedures.

teleri
Download Presentation

CHAPTER 8 VEHICLES AND OTHER MAJOR PURCHASES

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CHAPTER 8VEHICLES AND OTHER MAJOR PURCHASES FIN 235 SPRING 2013

  2. I. LEARNING OBJECTIVES • Steps in the planned buying process • The process of comparison shopping • Negotiate and decide effectively when making major purchases • Use effective complaint procedures

  3. II. PREPARATIONS BEFORE THE BUY DECISION • Determine what you need in contrast to what you would like (need vs. want) • Gather information on manufacturers’ various makes and models • Features • Warrantees • Expressed vs. Implied • Full vs. Limited (paying for parts and labor during warrantee period) • Extended warrantees can be quite expensive and have restrictions • Ditto for service contracts

  4. II. PREPARATIONS BEFORE THE BUY DECISION • Mileage and maintenance costs • New versus pre-owned (or refurbished) • Trade-in value • Comparison Shopping • Finding the best deal • Financing Costs

  5. III. FACTORS AFFECTING THE FINANCING DECISION • Leasing versus Buy • Hidden costs of leasing: end of lease value is affected by mileage and damage • Most leases require significant upfront cash (capital reduction) • All leases have an implicit cost of capital • You do not build equity (ownership) • Leasing is best if costs can be written off a business expense • Early termination fees can be quite costly • Balloonloans to be avoided • Gap insurance can be quite costly

  6. IV. NEGOTIATING THE DEAL • An Informed buyer is a strong buyer • MSRP: Mfr. Suggested Retail Price (the fair trade price price) • Dealer Invoice price (what they “pay” to manufacturer) • Holdbacks reduce factory invoice to dealer • Interest rate may be subject to negotiation • Trade-in values affect cost of the deal and dealers ultimate profits • Make the final decision at home rather than the dealership

  7. V. WHAT TO DO IF THE PURCHASE GOES SOUTH • Three day cooling off period works only if purchase occurs outside the store • Many states have lemon laws • Complaint may lead to mediation or arbitration • Small claims court ($500 to $2500 is typical range) • homework • Do the Math: 3, 4 • On the ‘Net: 1, 2 • Be Your Own Personal Financial Planner • 5 – Rebate or Low-Rate Financing? • 6 – Major purchase Decision-making Grid

More Related