8.1: How to buy a car

What is a lemon law?
A. A limit on how many lemons you can buy
B. A state law that allows you to return produce
C. A court where you can take small claims
D. Allows you to return a vehicle with significant mechanical issues

D. Allows you to return a vehicle with significant mechanical issues

What is MSRP?
A. Minimum Sales Rep Price
B. Manufacturers Suggested Retail Price
C. Maturation System Repair Penalty
D. Mario Spike Rosalina Peach

B. Manufacturers Suggested Retail Price

What is dealer invoice price?
A. The retail price for the car
B. The Manufacturers Recommended Retail Price
C. How much the automaker charged the dealer for the car
D. The customer's cost for acquiring the car

C. How much the automaker charged the dealer for the car

What is comparison shopping?
A. Ignoring reviews because they're often biased
B. Shopping at one store
C. Buying impulsively
D. Comparing prices between different products and locations

D. Comparing prices between different products and locations

What is a balloon loan?
A. A loan that requires larger and larger monthly payments
B. A loan with a fixed rate
C. A loan with no interest (like an empty balloon)
D. A loan with an extra-large final payment

D. A loan with an extra-large final payment

What does it mean in auto financing when you are said to be upside down?
A. You don't qualify for the lease or financing
B. You owe more on the car than it is worth
C. You wrecked the car
D. None of these

B. You owe more on the car than it is worth

What is a leased car's residual value?
A. The monthly lease payment
B. The car's projected worth at the end of the lease term
C. The down payment at the beginning of the lease
D. The value of the vehicle if you also reside there

B. The car's projected worth at the end of the lease term

What is the difference between mediation and arbitration?
A. A mediator helps the parties decide. In Arbitration the arbiter decides
B. Mediation has to do with the media. Arbitration involves arboretums
C. There is no difference, they mean the same thing
D. Arboretum is a fancy word for garden. So it's better than mediation.

A. A mediator helps the parties decide. In Arbitration the arbiter decides

Service contracts are usually free and included in the cost of appliances and other high-priced items.

A. True

B. False

B. False

An implied warranty that comes with a used car is that:

A.major repairs are the responsibility of the seller.

B.government agencies will repair safety defects.

C.the vehicle is guaranteed to run for a while.

D.hidden defects will be repaired at no cost to the buyer.

C.the vehicle is guaranteed to run for a while.

A used car sold "as is" has

A.a limited warranty.

B.an implied warranty of merchantability

C.a 30-day guarantee

D.a full warranty on parts but not labor.

B.an implied warranty of merchantability

An implied warranty of merchantability guarantees that:

A.the buyer must pay for all warranty repair costs.

B.the manufacturer must cover all warranty repair costs.

C.a toaster must toast bread.

D.a used car must come with a radio.

C.a toaster must toast bread.

It's generally more economical to keep your old car
A. True
B. False

A. True

Which of the following is the most economical?
A. Buy a reliable late model used car with good history
B. Always buy a new car to take advantage of the warranties
C. Lease. It is usually the best value for money
D. Buy used. The cheaper the better

A. Buy a reliable late model used car with good history

Which is true of leasing?
A. It's usually better value than buying
B. It may have lower monthly payments than buying
C. Leasing is a good way to avoid all the extra fees
D. You can sell the car at the end of the lease

B. It may have lower monthly payments than buying

Which of the following is NOT something you need to do before going to buy a car?
A. Research how reliable different options are
B. Research the Manufacturers Recommended Price (MSRP)
C. Comparison shop to see what good deals are out there
D. Turn down extended warranties

D. Turn down extended warranties

Which is a common mistake car buyers make?
A. Get a lot of money for a trade-in
B. Getting a low monthly payment but paying too much overall
C. Tell the salesperson they're considering other cars
D. Try to find the lowest price the dealership is willing to sell

B. Getting a low monthly payment but paying too much overall

What is a decision matrix?
A. A chart that helps you weigh different criteria
B. A fictional chart that feels like reality
C. A way to compare what is urgent versus what is important
D. A simple list of car models and their value

A. A chart that helps you weigh different criteria

Extended warranties are generally a good deal.
A. True
B. False

B. False