Personal Finance Chapter 13
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Questions and Answers

What does Gap Insurance pay for?

  • Only the repair costs after an accident
  • The insurance premiums for the car
  • The difference between what you owe and the value of the automobile if stolen or totaled (correct)
  • The full value of the automobile regardless of its status
  • What is an Option in the context of car features?

    A feature available for a particular car, such as safety, performance, and economy.

    What does MSRP stand for?

    Manufacturer's Suggested Retail Price.

    What is the purpose of the Buyer's Guide Sticker?

    <p>To explain the car's warranty coverage or lack thereof.</p> Signup and view all the answers

    What is a Certified Used Car?

    <p>A car that has passed a dealer's mechanical and physical inspection.</p> Signup and view all the answers

    What does the Truth in Lending Act require?

    <p>Creditors to provide borrowers with a complete written amount of credit terms and costs.</p> Signup and view all the answers

    What is a Vehicle Identification Number (VIN)?

    <p>A number assigned by the automobile industry used to identify a vehicle.</p> Signup and view all the answers

    What is depreciation?

    <p>Decrease in the value of property as a result of age and usage.</p> Signup and view all the answers

    What is an auto superstore?

    <p>A dealership that sells both new and used vehicles that are inspected, serviced, and warranted.</p> Signup and view all the answers

    What is a Lemon in automotive terms?

    <p>A vehicle that has serious mechanical problems that the manufacturer has been unable to fix after reasonable attempts.</p> Signup and view all the answers

    What is the FTC Used-Car Rule?

    <p>Requires dealers to fully disclose to buyers what is and is not covered under a used vehicle's warranty.</p> Signup and view all the answers

    What is a sticker price?

    <p>The price displayed on a vehicle as its selling price.</p> Signup and view all the answers

    What do Kelly Blue Book and Edmunds provide?

    <p>A publication that lists the estimated resale value of new and used cars.</p> Signup and view all the answers

    What is a Car Warranty?

    <p>A written promise to the customer that if something goes wrong with a vehicle within a specific time, it will be repaired at no cost.</p> Signup and view all the answers

    What does the Lemon law require?

    <p>A seller or manufacturer of a defective vehicle either to replace or repair it or to refund the buyer's money.</p> Signup and view all the answers

    What does 'as-is (no warranty)' mean?

    <p>The buyer is responsible for all flaws and repairs after the sale.</p> Signup and view all the answers

    What does warranty generally mean in a car sale?

    <p>If checked, the dealer pays for repairs.</p> Signup and view all the answers

    What are fixed expenses?

    <p>Items in your monthly budget.</p> Signup and view all the answers

    Study Notes

    Car Purchasing Terms and Definitions

    • Gap Insurance: Covers the difference between the amount owed on a car loan and the car's actual cash value if the vehicle is stolen or totaled.
    • Option: A specific characteristic or feature of a car that enhances safety, performance, or fuel efficiency.
    • Manufacturer’s Suggested Retail Price (MSRP): The price recommended by the vehicle manufacturer, often displayed on the vehicle's window.
    • Buyer's Guide Sticker: A label found on used cars that outlines warranty coverage details or indicates the absence of a warranty.
    • Certified Used Car: A vehicle that has undergone thorough mechanical and physical inspections by a dealer and meets certain quality standards.
    • Truth in Lending Act: U.S. law mandating that lenders provide clear and complete information about credit terms and costs to borrowers.
    • Vehicle Identification Number (VIN): A unique code assigned to each vehicle for identification purposes, crucial for registration and insurance.
    • Depreciation: The reduction in a vehicle's market value over time due to wear, age, and usage.
    • Auto Superstore: A dealership offering a wide range of both new and used vehicles that have been inspected, serviced, and come with warranties.
    • Lemon: A car with significant mechanical issues that the manufacturer fails to repair after several attempts within a reasonable time frame.
    • FTC Used-Car Rule: Regulations requiring dealers to disclose the specifics of what is covered and not covered by a used car's warranty.
    • Sticker Price: The displayed selling price of a vehicle, often used as a starting point for negotiations.
    • Kelly Blue Book and Edmunds: Publications providing estimates of resale values for new and used cars, essential for pricing and valuation.
    • Car Warranty: A written guarantee from the dealer promising to cover repairs for a specified period if issues arise with the vehicle.
    • Lemon Law: Legislation that mandates manufacturers or sellers of defective vehicles to replace, repair, or refund the purchase price to the buyer.
    • As-Is (No Warranty): Indicates that the buyer assumes all responsibility for any flaws and repairs after the sale of the vehicle.
    • Warranty: A checked box signifies that the dealer will cover repair costs for the vehicle for a defined period.
    • Fixed Expenses: Regular, predictable costs included in a monthly budget, crucial for maintaining financial stability when purchasing a vehicle.

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    Description

    Explore essential terms related to purchasing a car in this flashcard quiz. Learn about important concepts like gap insurance, options, and MSRP. This quiz is designed to help you understand the financial aspects of buying a vehicle.

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