Finance 1200 Chapter 8

Implied Warranty The product you buy should be fit for the purpose intended. This is guaranteed by law (can be either written, or oral)
Service Contracts A business agreement between a contractor and a customer covering the maintenance and servicing of a equipment for a specific period of time.
Limited Warranty A warrenty limited to specific parts, certain types of defects, or other conditions.
Consumers Union One place to gather information about a product.
Consumer Buying Process Problem Identification, Information Search, Evaluation of Alternatives, Purchase Decision, Post-purchase Decisions
Unplanned Purchases Impulse Buying
When buying a car, the best warranties are offered by a New Car Dealer
An implied warranty that comes with a used car is that The vehicle is in operating condition.
A vehicle sold “as is” has no express warranty
Express Warranty A seller’s promise or guarantee that a buyer relies on when they purchase an item. Written copy required if product is sold for more than $15.
Most cars bought from private parties have No express warranty
Edmund’s Guide, or Edmunds.com Provide price data
The sticker price of a car the suggested retail price
When planning to lease a car, compare the ________ of different leasing companies to minimize the price. Capitalized Cost
Maintenance is considered a variable operating expense of an automobile.
Warranty A piece of paper that guarantess the conditions, under which he can return, replace, or repair an item he has purchased.
Capitalized Cost the total price paid for a leased vehicle
Lemon Law Gives you the right to ask for a refund should you get a “lemon”
An advantage of renting Ease of mobility
Who does a lease protect? The tenant and the landlord.
Can current interest rates affect the price of a home? Yes
(T/F) Negotiating a purchase price for a home usually involves an offer and counteroffers. True
(T/F) Prepaid interest may be a part of a mortgage agreement. True
Amortization pay off an amount owed with planned payments
(T/F) An FHA-insure mortgage has less risk than a conventional mortgage for the financial institution. True
(T/F) An escrow account is designed to reduce the cost of a mortgage. False
Appraisal An expert estimate of the value of something.
(T/F) The purpose of a rate cap in an adjustable rate mortgage is to limit the amount by which the interest rate can vary. True
Sublet an apartment Obtain another tenant to complete a lease period
The purpose of zoning laws is to restrict property use
Earnest money used as evidence of good faith by homebuyer
Points Prepaid interest charged by a mortgage company
Conventional Mortgage Fixed-rate mortgage
Disadvantage of FHA and VA mortgage longer processing time
Home equity loan second mortgage
Refinance mortgage when interest rates fall
Contingency Clause A contract condition that states that the agreement is binding only if certain event occurs

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