Book Opener

CHAPTERASSESSMENTSection 16.1 Owning a Vehicle● Before you sign any documents to purchase a car,you should know the following facts:(1) the exactprice you are paying for the vehicle; (2) the amountyou are financing; (3) the finance charge; (4) theAPR (the annual percentage rate); (5) the numberand amount of payments you will be required tomake; and (6) the total sales price (the sum of themonthly payments plus the down payment).● Before you buy a new car, do some calculationsand research. Determine how much you canreasonably afford to pay for a new car. If youdecide that you must borrow money, shop aroundfor the best credit terms. If you are planning ontrading in a vehicle, do not discuss it with thedealer until you’ve negotiated the best price foryour new car. Consider selling your old vehicleyourself, instead of trading it in.● Leasing a car is ultimately more expensive thanbuying the same car. Although leasing has theadvantage of a low down payment and smallermonthly payments, you will have to return the carat the end of the lease period and will have nothingto trade in when you need to obtain anothervehicle. If you choose to lease a car, you may alsobe responsible for excess mileage charges, excesswear charges for body damage or worn tires, andcharges for ending your lease early.● If you have bought a defective car, you shouldnotify the seller of any major defect immediately.You may also be able to revoke your acceptanceif the seller has sold you a car with serious andinitially undetectable defects.● Buying a car from a dealer usually entitles you tothe protection afforded by the warranty of merchantabilityand the warranty of fitness for aparticular purpose. Another advantage of buying aused car from a dealership is that dealers oftengive you a guarantee. Buying a car from a privateparty is sometimes cheaper than buying a car froma dealership. However, buying from a private●●party does not give you the benefit of the impliedwarranty of merchantability. You must buy the car“as is,” and as a result, you will have no recourse ifsomething goes wrong with the car. The car mayalso be stolen, and it may be repossessed by therightful owner, even though you have purchased itin good faith. If you choose to buy from a privateparty, it is generally a good idea to buy from afriend or associate. Buying a rental car might be agood option, but keep in mind that such vehiclesmay have had heavy use and will probably havehigh mileage. On the other hand, rental vehiclesusually have had regularly scheduled maintenanceand come with warranties.The federal odometer law requires everyone whotransfers a vehicle, unless it is more than 25 yearsold, to provide a written mileage disclosurestatement showing the odometer reading at thetime of the transfer. This law is an attempt toprevent odometer fraud.If an auto shop is responsible for some wrongdoingwith regard to your car, the bondingcompany is an insurer who must pay you forresulting losses suffered. This requirementprotects consumers from unscrupulousness orincompetence of auto repair shops.Section 16.2 Motor Vehicle Insurance● The purpose of financial responsibility law is toprotect against injury or damage to propertyresulting from an accident.● Bodily injury liability insurance protects theinsured against claims or lawsuits for injuries ordeath caused by his or her negligence. The maximumamount of coverage is $100,000 for anyperson in any one accident, and $300,000 for allinjured parties in any one accident. Uninsuredmotorist insurance protects you from a driverwho commits a hit-and-run or a driver whois uninsured.356 Unit 3: Understanding Consumer Law