Family Finance Exam 2 Chapter 8

Front 1

The key to success in negotiating a car purchase is to obtain the _____ before discussing any other aspects of the deal

Back 1

price of the car*

Front 2

When you lease a car you are basically paying the difference between its beginning value and its projected value at the end of the lease called its

Back 2

Residual Value*

Front 3

As used in the field of insurance, risk means

Back 3

uncertainty*

Front 4

Your auto insurance policy liability limits are 100/250/50. You fall asleep at the wheel and hit 4 parked cars and a store causing $160,000 in damage. How much will your company cover of this loss?

Back 4

$50,000*

Front 5

To affordably apply the “large loss principle” to automobile insurance, you would want to select a

Back 5

higher deductible and higher liability limits.*

Front 6

Insure the losses that you cannot afford and assume the losses that you can reasonably afford

Back 6

Large-loss principle

Front 7

You can compare leasing and buying a vehicle by simply comparing the monthly lease payment to the monthly loan payment if you purchased vehicle instead.

Back 7

False

Front 8

With a closed-end lease on a vehicle you may be required to pay the difference between the actual market value of the vehicle at the end of the lease period and the residual value for the vehicle that was projected when the lease began.

Back 8

False

Front 9

the projected value of a leased asset at the end of the lease time period

Back 9

residual value

Front 10

measures the rent charge portion of your payment

Back 10

money factor

Front 11

includes the price fo the vehicle plus what the leasee paid to finance the purchase plus any other items you agree to pay for over the life of the lease, including insurance or a maintenance agreement

Back 11

gross capitalized cost

Front 12

moneys paid on the lease at its inception

Back 12

capitalized cost reductions

Front 13

determined by subtracting the capitalized cost reductions from the gross capitalized cost

Back 13

adjusted capitalized cost

Front 14

you must pay any difference between the projected residual value of the vehicle and its actual market value at the end of the lease period

Back 14

open-ended lease

Front 15

the holder pays no charge if the end-of-lease market value of the vehicle is lower than the originally projected residual value

Back 15

close-end lease

Front 16

With a balloon automobile loan, the last payment is roughly equivalent to the projected residual value of the vehicle after the last loan payment is made.

Back 16

True

Front 17

the last monthly payment equals the projected residual value of the vehicle at the end of the loan period

Back 17

balloon automobile loan

Front 18

The most reliable source of high quality used vehicles is new vehicle dealerships although the prices also tend to be higher.

Back 18

True

Front 19

The best way to handle being lowballed is to walk out of the dealership without signing anything.

Back 19

True

Front 20

When a dispute is resolved through arbitration, the arbitrator will render a decision that is binding on at least one of the parties to the dispute.

Back 20

True

Front 21

A vehicle dealer who offers a higher trade-in value than a vehicle is actually worth and then makes up the difference by charging an overly high price on the purchased vehicle is engaging in

Back 21

High-balling

Front 22

When buying a vehicle, preshopping research would focus on all but which of the following?

Back 22

Which vehicle is the best buy

Front 23

The manufacturer's suggested retail price for a new vehicle is also called the

Back 23

Sticker Price

Front 24

Which of the following steps in the buying process has the goal of finding the best buy?

Back 24

Comparison Shopping

Front 25

Which of the following is a disadvantage of an open-end lease as compared to a closed-end lease?

Back 25

You may be required to come up with more money at the end of an open-end lease period.

Front 26

Which is the term used to describe the charge assessed at the time of turning in a leased vehicle to pay for preparing the vehicle for resale?

Back 26

disposition fee

Front 27

Attempts by a vehicle seller at the time of signing the contract to raise the price that had previously been agreed upon is referred to as

Back 27

Lowballing

Front 28

Under which of the following dispute resolution procedures does a neutral third party assist the parties to the dispute in reaching a mutually agreeable solution?

Back 28

Meditation

Front 29

A capitalized cost reduction might be charged on a lease if you desire to get out of a lease arrangement early.

Back 29

False

Front 30

A disposition fee on a vehicle lease is assessed when you turn in the vehicle at the end of the lease in order to get it ready for resale.

Back 30

True

Front 31

The starting point for any negotiations for a new or used vehicle is your affordable monthly payment.

Back 31

False

Front 32

Lowballing is an attempt by an auto dealer to raise the price of a vehicle after you have already orally agreed upon a price.

Back 32

True

Front 33

Major purchase decisions should be made at the dealer's place of business so that any questions that you may have can be readily answered.

Back 33

False

Front 34

All of the major vehicle manufacturers offer alternative dispute resolutions programs so you do not have to go to court to get an unbiased resolution to a warranty dispute.

Back 34

True

Front 35

Before interacting with a seller in any major way when making a major expenditure you should do all of the following except

Back 35

Comparison Shopping

Front 36

invoice price/seller's cost are synonymous?

Back 36

True

Front 37

One of the best ways to get professional help when buying a new vehicle is to consult

Back 37

A new vehicle buying service

Front 38

The dollar figure in a lease contract that includes the price of the vehicle plus what the leasee paid to finance the purchase is the

Back 38

gross capitalized cost.

Front 39

Leasing costs for a new vehicle are partially based on its projected value at the end of the lease time period called its

Back 39

Residual Value

Front 40

Monies paid on a lease at its inception including any downpayments, trade-in values or rebates are referred to as the

Back 40

capitalized cost reduction.

Front 41

Transfering the title from the lender to the buyer is not an option when the last payment is due on a balloon auto loan?

Back 41

True

Front 42

The process of discussing the actual terms of an agreement with a seller is called

Back 42

negotiating

Front 43

An early termination charge may be required on a lease should you want to get out of the lease early.

Back 43

True

Front 44

With an open-end lease on a vehicle you may be required to pay the difference between the true market value of the vehicle at the end of the lease period and the residual value projected when the lease began.

Back 44

True

Front 45

The starting point for any negotiations for a new or used vehicle is the actual cash price of the vehicle.

Back 45

True

Front 46

The key to success in negotiating a new vehicle purchase is to get a price for the vehicle itself before discussing all other aspects of the deal such as trade-in value and APR.

Back 46

True

Front 47

features of a lease is touted by dealers as being useful for comparing among leases but really is not useful for measuring the overall cost of financing?

Back 47

Money Factor

Front 48

Which of the following features of a lease pays for a credit report, application fee and other paper work?

Back 48

Acquisition Fee

Front 49

In which step of the buying process would you come to an agreement with a seller on the actual terms of the deal?

Back 49

Negotiating