Finance and Insurance - The Profit Center I would like to make myself clear on a few items of interest before I get too deep into the sales processes at any dealership, including: automobile, recreational vehicles, boats, motorcycle, and even furniture or other big ticket items. A business has to turn a fair profit in order to stay in business. I believe that they should make this profit and use it to pay better quality employees a premium wage in order to serve you better. The financial strengths or weaknesses of any business can definitely have a dramatic effect on your customer service and satisfaction. I do not, in any shape or form, wish to hurt a dealerships profitability, as it is essential for his survival. I merely want to advise people how to negotiate a little better in order to make the profit center more balanced. Let's get right down to this! Every dealership has a finance and insurance department. This department is a huge profit center in any dealership. In some cases, it earns more money than the sale of the automobile itself. Profits are made from many things that most buyers do not understand. You as a consumer should understand the "flow" of the sales process to understand the profit centers that are ahead of you. Most negotiating from the consumer seems to stop after the original price is negotiated and agreed upon. Let's examine just a small portion of what leads up to that point. The first thing that every consumer should understand is that when you go to a dealership several things come into play. One of the most important things that I could point out to you is that you are dealing with a business that has been trained to get the most amount of money from you as they can. They are trained and they practice these tactics everyday, day after day, week after week, month after month, and year after year. Let me point out a couple of important facts that I have said in this paragraph. First, you'll notice that I said a dealership and not a salesman and secondly, I emphasized times of day after day, week after week, etc. etc. This was done to let you know that the salesman is working very closely with the sales managers in order to make as much money as he can. Your interests are really not their objective in most cases. One tactic that is used heavily in the business is that the salesman says he is new to the business. This may be true or not, however; keep in mind that he does not work alone. He is working with store management, who gives him advice on what to say and when to say it. These guys or gals are very well trained on how to overcome every objection that you may have to buying from them. They have been trained in the psychology of the buyer and how to tell what your "hot buttons" are. They listen to things in your conversation that you may say to one another as well as to the salesman. They are trained to tell their desk managers everything that you say and then the desk manager is trained to tell the salesman exactly what and how to answer you. A seasoned salesman does not need as much advice from his desk and may negotiate a little more with you directly without going back and forth. The process of negotiation begins the moment that you walk into the front door or step foot out of your car and begin to look at vehicles. Different stores display inventory in different ways. This is done for crowd control or more commonly known as "up control". Control is the first step in negotiating with a customer. Ever who asks the questions controls the situation. Let me give you an example: A salesman walks up to you and says "Welcome to ABC motors, my name is Joe, and what is yours?" The salesman has just asked the first question- you answer "My name is George." He then asks you what you are looking for today, or; the famous "Can I help You?" As you can see, step after step, question after question, he leads you down a path that he is trained to do. Many times a well trained salesperson will not answer your questions directly. In some cases, they only respond to questions with other questions in order to avert the loss of control. An example of this could be something like you asking the salesman if he has this same car with an automatic rather than a stick shift. Two responses could come back to you. One would be yes or no, the other could very well be something along the lines of: 'don't you know how to drive a stick shift?" In the second response the salesman gained more information from you in order to close you. Closing means to overcome every objection and give your customer no way out other than where do I sign. The art of selling truly is a science of well scripted roll playing and rehearsal. We have established that the negotiating process begins with a series of questions. These questions serve as two main elements of the sales process. First and foremost is to establish rapport and control. The more information that you are willing to share with you salesman in the first few minutes gives him a greater control of the sales process. He has gathered mental notes on our ability to purchase such as whether you have a trade in or not, if you have a down payment, how much can you afford, are you the only decision maker (is there a spouse?), how is your credit, or do you have a payoff on your trade in? These are one of many pieces of information that they collect immediately. Secondly, this information is used to begin a conversation with store management about who the salesman is with, what are they looking for, and what is their ability to purchase. Generally, a sales manager then directs the sales process from his seat in the "tower". A seat that generally overlooks the sales floor or the sales lot. He is kind of like a conductor of an orchestra, seeing all, and hearing all. I cannot describe the entire sales process with you as this varies from dealer to dealer, however; the basic principals of the sale do not vary too much. Most dealerships get started after a demo or test drive. Usually a salesman gets a sheet of paper out that is called a four square. The four square is normally used to find the customer's "hot points". The four corners of the sheet have the following items addressed, not necessarily in this order. Number one is sales price, number two is trade value, number three is down payment, and number four is monthly payments. The idea here is to reduce three out of the four items and focus on YOUR hot button. Every person settles in on something different. The idea for the salesman is to get you to focus and commit to one or two of the hot buttons without even addressing the other two or three items. When you do settle in on one of the items on the four square, the process of closing you becomes much easier. One thing to keep in mind is that all four items are usually negotiable and are usually submitted to you the first time in a manner as to maximize the profit that the dealer earns on the deal. Usually the MSRP is listed unless there is a sales price that is advertised (in may cases the vehicle is advertised, but; you are not aware). The trade value is usually first submitted to you as wholesale value. Most dealers request 25-33% down payment. Most monthly payments are inflated using maximum rate. What this all boils down to is that the price is usually always negotiable, the trade in is definitely negotiable, the down payment may be what you choose, and the monthly payment and interest rates are most certainly negotiable. If you do your homework prior to a dealership visit you can go into the negotiation process better armed. You still need to keep two things in mind through this process. The first item is that you are dealing with a sales TEAM that is usually highly skilled and money motivated. The more you pay the more they earn. The second item to remember is that you may have done your homework and think that you are getting a great deal and the dealer is still making a lot of money. The latter part of this statement goes back to the fact that it is essential for a dealer to make a "fair" profit in order to serve you better. Once your negotiations are somewhat settled, you are then taken to the business or finance department to finalize your paperwork. Keep in mind that this too is another negotiating process. In fact, the finance manager is usually one of the top trained sales associates that definitely knows all the ins and outs of maximizing the dealerships profit. It is in the finance department that many dealers actually earn more than they earned by selling the car, boat, RV, or other large ticket item to you. We will break these profit centers down for you and enlighten you as to how the process usually works. Remember that finance people are more often than not a superior skilled negotiator that is still representing the dealership. It may seem that he or she has your best interests at heart, but; they are still profit centered. The real problem with finance departments are that the average consumer has just put his or her guard down. They have just negotiated hard for what is assumed to be a good deal. They have taken this deal at full faced value and assume that all negotiations are done. The average consumer doesn't even have an understanding of finances or how the finance department functions. The average consumer nearly "lays down" for anything that the finance manager says. The interest rate is one of the largest profit centers in the finance department. For example, the dealership buys the interest rate from the bank the same way that he buys the car from the manufacturer. He may only have to pay 6% to the bank for a $25,000 loan. He can then charge you 8% for that same $25,000. The dealer is paid on the difference. If this is a five year loan that amount could very well be $2,000. So the dealer makes an additional $2,000 profit on the sale when the bank funds the loan. This is called a rate spread or "reserves". In mortgages, this is disclosed at time of closing on the HUD-1 statement as Yield Spread Premium. This may also be disclosed on the Good Faith Estimate or GFE. You can see why it becomes important to understand bank rates and financing. Many finance managers use a menu to sell aftermarket products to you. This process is very similar to the four square process that I discussed in the beginning. There are usually items like gap insurance, extended service contracts, paint and fabric guard, as well as many other after market products available from this dealer. The menu again is usually stacked up to be presented to the consumer in a way that the dealer maximizes his profitability if you take the best plan available. The presentation is usually given in a manner in which the dealer wins no matter what options are chosen. With the additional items being pitched to you at closing, your mind becomes less entrenched on the rates and terms and your focus then turns to the after market products. Each aftermarket item can very well make the dealer up to 300-400% over what he pays for these items. Gap coverage for example may cost the dealer $195.00 and is sold to the consumer for $895.00. The $700.00 is pure profit to the dealer and is very rarely negotiated down during this process. The service contract may only cost a dealer $650.00 and is being sold for $2000.00. The difference in these items are pure profit to the dealer. You see, if you only paid $995.00 for the same contract, the dealer still earns $345.00 profit from you and you still have the same coverage that you would have had if you had paid the $2000.00. The same is true for the gap coverage. You are covered the same if you paid $395.00 or $895.00 if the dealers costs are only $195.00. The only difference is the amount of profit that you paid to the dealer. Another huge profit center is paint and fabric protector. In most cases the costs to apply the product are minimal (around $125.00 on average). In many cases the dealer charges you $1200-$1800 for this paint and fabric guard. As you can see, these products sold in the finance department are huge profit centers and are negotiable. I also have to recommend the value of most all products sold in a finance department. It is in your best interest to get the best coverage possible at the best price possible. Always remember this: The dealer has to make a fair profit to stay in business. It just doesn't have to be all out of your pocket.
» » Apa Berlaku Pada Badan Kita Selepas Mati? Baca Ni, Meremang Juga Bila Tahu

Apa Berlaku Pada Badan Kita Selepas Mati? Baca Ni, Meremang Juga Bila Tahu






























Tax Increment Financing - The Boon for Bums and Bureaucrats A History of TIF Because of the expansion of federalism and the increased use of unfunded mandates by the state and federal government, local governments have been forced to provide more services with smaller budgets. In order to balance the budget, some local governments have made better spending decisions while others have done research to eliminate waste and cut unproductive or unnecessary services. These are examples of good fiscal management. Yet other governments have chosen to go down a different road, preferring to have their cake and eat it too. Instead of cutting expenses programs or eliminating waste, these governments have decided to provide same high level of services and simply used other methods to acquire the revenue. TIF is one of these methods, and while proponents of big spending call it "creative", those who still believe in sound fiscal management call it out as "deceptive". It has gained attention recently due to budget crisis's faced by local governments but it has been around for some time. In fact, TIF first appeared California in 1952 as a means to provide local funds to meet the matching levels required to receive federal grants. It has been used heavily by local governments since the 1980s after a decrease in federal funds. TIF occurs when assessed valuation of property is "frozen" in a certain district, called a TIF district for a set amount of years. Joyce Y. Man describes the sometimes awkward process in simple terms; "Property taxes levied on this frozen tax base continue to accrue to local taxing bodies, but taxes derived from increases in assessed values (the tax increment) resulting from new development are used to pay for infrastructure needs and development expenditures in the TIF district." When a city uses TIF, they are more or less using "excess" or extra taxes for pet projects, sometimes to build infrastructure and sometimes to cleanup blight Really these are not extra taxes at all but rather an increment created by making a bigger tax bill, it's stealing but it's just cleaver stealing. All politics on the size of government and the right to taxation aside however, there are three major problems to consider with TIF and it's applications. First, the citizens who pay for the 'increment" are not usually the ones benefiting from the spending. For example, often persons in a middle class area of a city end up paying to subsidize residential development for the lower class, thus they pay a burden but receive no benefit for it. This fails all logic tests. Second, taxpayers often have no say in how it is spent! Usually, a sort of "TIF agenda" is formed between a city and a county and the voters are left in the cold. Often, it is not for things they want or need but policies that will make a city bureaucrat look good or a county commissioner get the state off their back about an eyesore community. All of this waste occurs at the expense of the taxpayer. A third problem stems from the TIF the calculus itself as it relies on an unstable mathematical model: For TIF districts, the tax rate and assessed value are known before the levy or tax revenue is calculated. This process of calculating TIF revenue adds an element of risk to the TIF financing process. What more or less occurs is a hedging of bets on what revenue might be and then spending that money on projects that a city is unsure if it can finance. The argument could be made that many public budgeting mechanisms are not absolutely reliable. However, since TIF occurs over such a long period of time, if revenue projections are misguided or missed entirely, then the taxpayer should not be punished for that error. With TIF you pay in but you don't get anything out, it's hard to hold accountable the projects that your money is spent on, and it is not based on stable mathematical formulas. For these reasons alone it should be removed from the law boos, but since it is all too tasty and easy a cookie to reach from the jar, it will not be. Instead of pining for its abolition, it makes more sense to analyze the legal framework it operates in and then restrict it so that TIF can be used on a more limited basis, in less ways, and in a more accountable fashion. A Legal Framework for TIF Every state in the union currently has TIF laws, with the exception of North Carolina and Delaware. While the North Carolina enacted TIF legislation in 1982, it was rendered useless by an amendment to the state constitution. Yet even though so many states allow the usage of TIF, they vary greatly in what they allow to be used and when. The legal process takes part in five distinct places, each of them allowing or disallowing wiggle room for local politicians on what they might use TIF for. In the beginning, there is project initiation. As with any cleanup or re-development project, a problem must first be spotted for it to be dealt with; it is the same with TIF. The law comes in regarding how much authority a given government has to decide what a problem is indeed. In some states, this rests solely with the municipality to decide. This is a good thing generally speaking because frequently TIF is misused and government is easier to hold accountable at the local level. Other states like California use a mixture of municipality and county governments.This is dangerous because it might cause backroom deals to get a TIF initiative passed, resulting in a pork barrel politics. In fact, only seven states, of which Minnesota is one, require some sort of quantified blight determination or in other words, logic, behind their use of TIF. This is not only sad but also terrifying, if the state is unwilling to demand a firm number on what must be done, then counties, cities, and re-development agencies have free reign over public money, which amounts to socialism, making the trail harder to follow for those interested in spotting misuse of public dollars. There is some security to be had in knowing that Minnesota is leading the way but there is cause for alarm in that now when TIF is more popular then ever, Minnesota is the best example for restraint in use. The second stage, called formulation, involves creating a plan of action to cleanup the blight or create industrial development. We are a fairly poor example on restraint in this stage of TIF Minnesota's own body of TIF law gives a fairly large amount of freedom to the municipality in determining what the problem is and how it should be solved: That in the opinion of the Municipality; (i) the proposed development or redevelopment would not reasonably be expected to occursolely through private investment within the reasonably foreseeable future; and (ii) the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax. This means that so long as the municipality is of the opinion that redevelopment will be a positive thing and it might yield a profit, then it is alright to proceed with the plan. Not exactly language that makes one feel safe with their wallet as it appears city administrators can spend taxpayers' money with relative ease. The next phase is plan adoption, and it is sandwiched in between formulation and implementation because they define it, for this reason it is not necessary to discuss it. Implementation is quite important as it involves the manner in which a government can execute the plan and who takes part in that execution. Project finances are a hot topic at this point in the TIF continuum. Craig L. Johnson, the cartographer of this legal framework, points out the importance of law at this stage. By setting financing restrictions at the outset of a TIF project, local governments can develop financial plans under less uncertainty. A vivid example is provided in the set of laws that authorizes and constrains the ability of a redevelopment agency to leverage their finances through the issuance of long-term debt securities. Of the 48 states that have authorized TIF, 46 allow the authority to issue bonds and other indebtedness... States range in their views on how TIF should be implemented, some authorize a number of development types, such as Minnesota, where residential, industrial, and commercial developments are all allowed. The enabling statutes in Colorado on the other hand do not allow residential development, likely out of a fear of municipalities using eminent domain as a club. The last stage of evaluating and terminating a tax increment district, is probably the most important and one of the most overlooked. This invites danger to the party and allows counties and municipalities to use TIF as a crutch. Herein lays a major problem as it causes governments to spend money they don't have and rely on income they might not receive. This increases debt and furthers reliance on credit and deceptive budgetary practices. In Minnesota, the standard TIF district lasts for 15 years however; a delinquent district may be decertified by the County Auditor under four categories.A county may decertify a district if the time expires (i.e. 15 years runs up), if the municipality is smart enough to set a time limit (i.e. a 7 year project instead of a 15), if the project is complete, or if the municipality makes a written request for decertification. If county auditors became more aggressive, they could stop TIF abuse under project completion or work with city officials to create a mutual interest in decertification. Both are good strategies for a county or city to use if they wish to remove TIF abuses. If a TIF district has shown no activity, Minnesota law gives a good deal of power to counties to "knock out" and "knock down" these districts. The Three-Year "Knockout Rule" forces the county auditor to decertify a district, forcing them to re-apply for certification. The "Four-Year Knock Down" Rule applies to each parcel individually and makes sure that if TIF activity is not occurring, than "the original net tax capacity of the parcel must be excluded from the TIF district." This is a was of protecting individual homeowners who might be pay more than their share in TIF dollars. Impact of TIF on Suburbs and Rural Areas In 2006, The Citizens League of Minnesota issued the 2006 TIF report, proving that cities are becoming over-reliant on TIF. For example, Minneapolis ranks number one with a TIF capacity of $56,836,388, which is some 14.7 percent of the total tax capacity.[16] There has been a constant complaint that urban areas are to blame as they are the big TIF spenders, yet suburbs and rural areas rely on TIF to a much larger extent. For example, Rogers is a city with a population of 6,000 and has a TIF capacity of $2,944,844, which might seem small compared to Minneapolis, however, their actual use of TIF is much greater. In fact, TIF accounts for 25.8% of their total tax capacity. That is more than a quarter! Marshall also ranked in the top 50 with a TIF capacity of $1,157,109, and here TIF accounts for more than 13.5% of the total tax capacity, which is almost the same as Minneapolis. The Marshall Independent recently published an article titled Defending The Use of TIF Incentives where mayor Bob Brynes gave a rebuttal as to why Marshall should use TIF, "We really tried to use it as appropriate-for job creation and for increased investments to support those jobs. That would not have happened without tax increment financing."[19] Brynes claims that Marshall is a textbook example of how to use TIF citing that industrial development is good, as opposed to a retail investment such as Rogers's $5 dollar investment in the floundering Cabella's store, which turned out pretty bad. Brynes says, "When a city, like Marshall, properly invests TIF in industrial growth it's usually not pitting competitors against one another. There was no other corn plant in existence." While the logic makes sense, it seems like an advanced form of monopolistic socialism whereby government is taking over enterprise and impeding the right to compete. But what if Ethanol doesn't take off as the Mayor Bob Byrnes says? Right now there are numerous benefits to using ethanol such as tax breaks and less expensive gas (due to large tax breaks for owners of ethanol friendly gas stations). Even though Ethanol has only 20% the energy content of gasoline and creates more pollution than gasoline, it is still being viewed as a viable replacement. It makes one consider, what will happen when the subsidies stop and people don't wish to pay extreme prices for this alternative fuel. It is easy to speculate that Marshall's industrial investment in ethanol might go down the drain rather than in citizens gas tanks, yet the administrators who insisted on making the bad investment will evade angry taxpayers by hiding behind TIF statutes. Summary Whether it is a good investment or not makes no difference. Any taxes left over should go back to the taxpayers who can then invest in what they see fit, anything else is theft. TIF is not unlike social security where the taxpayer throws a good deal of money into the pot and has little say in how it gets used. TIF is like a cookie jar that administrators like to dip their fingers in during a bad budget year. The legal framework of TIF must be analyzed more comprehensively by Congress. Statutes are what give TIF abusers their power and so long as their language is broad and enabling, it will be a constant source of refuge for TIF abusers. In recent years, TIF usage has been curbed somewhat by revising the legal process and demanding more documentation for usage; however, it is still widely used and abused. It would be wise for Congress to limit TIF usage by creating shorter time windows and if possible, eliminate TIF from the palette of options available for government finance. County governments can also take a cue from Pat Andersons report on TIF and aggressively decertify inactive or failing districts in an attempt to protect against abuse. My background is in P & C insurance, sales, and marketing. I also work with investments and bank products. I have worked in sales and marketing in various capacities for over six years. Much of the work has included heading PR and marketing campaigns and creating formulas for lead generation. I can write a large number of subjects.




Share on Facebook
Share on Twitter
Share on Google+
Share on LinkedIn