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.
» » Isteri Fazley Yaakob Dedah ‘Perangai’ Sebenar Ibu Kandung?

Isteri Fazley Yaakob Dedah ‘Perangai’ Sebenar Ibu Kandung?











What Everyone Should Know - 10 Easy Steps To Improve Your Family's Finances If I went out and asked people for their opinions, I think most would agree that living in today's economic environment has become a great challenge. The media's primary focus is on the health of the economy, and strength of the job market. The thing is, each one of us have our own personal economy. The stability of that economy depends on our ability to maintain a steady income, and have the wisdom to make prudent financial decision. WHAT'S THE PROBLEM? Many Americans realize they're not where they want to be financially. They live day-to-day in fear and frustration. Afraid that even the slightest change in income could have a devastating effect on their lives. They are frustrated that the increased costs of taxes, debt, and daily living expenses are making it incredibly difficult to save toward having a sound financial future. Over the years, I have personally witnessed families suffer as a result of their struggles with money matters. These harsh realities lead me to asking myself, why? Why are there so many American families struggling with debt? Why do so many families hope and pray that the car doesn't break down, or the air-conditioner doesn't give out. Why too, do so many Americans have little or no savings; not even an emergency cash fund. WHAT'S THE ANSWER? At first the answers to all my "whys" wasn't apparently clear. Then it hit me, and the reasons were suddenly clear as day. When you consider that most Americans have little to no financial education, the severity of their money woes should come as no surprise to anyone. Now, when I say financial education, I'm not talking about going to college. You certainly don't need a college degree to become smart about managing your money responsibly. Families make the money decisions they do because they're in an economic rut; they simply don't know it. They don't realize that there are other options available to them. No one has ever sat them down and shown them that there might be more productive ways for them to approach their personal finances. To offer a bit of guidance, I've listed 10 important steps you can take, and why you should take them. It's all about improving your money IQ. Don't worry, anyone with a pencil, paper, calculator, and a little time can complete these 10 easy steps. 10 EASY STEPS Map your spending - Each month we all have expenses that remain consistent. These expenses are commonly referred to as fixed expenses. These are the bills you have month after month; mortgage payments (rent), car payments, and utilities are good examples of fixed expenses. You may combine and group these expenses if you like. An example of grouping could be the combining of car and credit card payments and labeling them, debt expenses, or labeling rent and utilities as household expenses. Remember, this is your plan, so feel free to list your expenses in whatever way makes the most sense to you. Tracking your discretionary expenses - Unlike fixed expenses, discretionary expenses are "nice to have" items, which we are likely to spend money on each month. Remember, discretionary expenses are those expenses over which you have complete control. One big problem that many individuals face, is when they come to the end of the month and have no idea where all their money gone. Discretionary spending is frequently the culprit. It is easy to spend more than we realize on nonessential items. Trips to the coffee shop, going out each day for lunch, buying lottery tickets, visiting a casino, or simply purchasing items we don't need are great examples of discretionary expenses. Involve the family in discussing family goals - Involving children helps them to understand, and it makes them feel as though they are taking an active part in the decision-making process. Children will often resent parents for not spending money on the things they want. They don't understand what it takes to run a household. They don't associate working with income (money). To a child, your pay check is an enormous amount of money. They have no idea that it takes a great deal of money just to keep the lights on, put food on the table, and provide a roof over their head. Of course as the parent, you will undoubtedly have the greatest amount of input when it comes to formulating a family fiscal plan (which I like to call a financial blueprint). On a side note, the discussion does not necessarily have to revolve entirely around finances. This might also be the perfect opportunity to take advantage of the togetherness, and improve the family bond. Evaluate your debt - Once you have listed out your expenses, if you find that you have more debt than you are comfortable with; it is important to create a plan for paying down (paying off) that debt. Debt is frequently easy to obtain, but it can be extremely difficult to pay off, especially credit card debt. It's not that unusual that a credit card is being used to supplement a family's income. The problem is you see, at some point; you're going to reach your credit limit. Bye, bye supplemental income, but you still have to make those payments, and to make matters worse; the interest rate on a credit card is typically quite high. Go back through your credit card statements. In the past year, how have you been using your credit? If you find that you are relying on credit cards to pay for everyday expenses, such as groceries, or fuel costs you need to make so changes. It's within your control to change how you are using your credit. Try curtailing your credit card usage and develop a plan for paying off this debt. Just imagine the extra money you will have at the end of each month if you no longer had to make this payment. Create savings goals - We often place everyone ahead of ourselves. What I mean by this is, if you hope to have any savings, it must come out of what's remaining at the end of the month. This may be a very modest amount, and in some cases nothing at all. Get yourself in the habit of paying yourself first. Treat your savings account like any other bill. If all you are able to budget for savings is twenty-five dollars a month, then make sure you transfer that amount into your savings account each month. Many banks give you the ability to set up an automatic transfer into your savings account. One advantage to having this transfer made automatically is it helps you to become better at managing your money. Pay yourself first, and you will quickly learn how to live on what's left. Evaluate spending - Believe it or not, just about every household has spending that they can reduce, or in some cases do away with altogether. This frees up money for other more practical uses; such as reducing your debt. If you are struggling, then you're likely looking at having to make some tough choices. There are only two ways to increase your available cash flow. You must either earn more income, or sacrifice some unnecessary expenses. Sacrifice is difficult, and no one looks forward to making those decisions; unfortunately, this is often the only way you are going to get your financial house in order. How you trim your spending is of course entirely up to you. Frequently, a small decrease in several areas of spending is sufficient enough to free up more money than you might think. Create a budget - Here is where I will typically lose people. To many, the thought of creating a budget sounds like such a daunting, time-consuming task. In order to make my point, what comes to mind when you think of a budget? Let me guess; things like restrictive, depressing, it's a waste of time, and impossible to follow are probably at the top of the list. Well, you're not alone. A realistic budget is, however, a critical tool in helping you to achieve financial success. A personal budget should serve as a guide. If you want to control spending, how else are you going to track your progress? With a written budget, you can rank your spending. By keeping a record, you will be able to see exactly how your actual spending compares with the amount you have budgeted. If you're spending gets off track, a budget will assist you to more readily identify and correct the problem. Be sure to have a financial safety net - Try to set aside three to six months of income into a savings account. This money can be used for unexpected expenses, or to make a cash, rather than credit purchase. Just look at the amount of interest you could save. Another important part of this safety net is deciding how much life insurance you have and need. Life insurance can provide cash if a working parent dies. It might replace this income for a period of time. In addition, you might also want to consider disability income insurance. A good place to start is by checking with your employer. Many employee benefit plans offer short and long-term disability income coverage. If this coverage is not available through your employer, you might want to consider purchasing an individual policy. A heart attack, or illness such as cancer could prevent you from working for months. Disability income coverage is not for everyone, but it is certainly worth considering. Most of us don't like having to pay for insurance, but the protection it provides when things go wrong can be invaluable to say the least. Consider working with a financial coach - A Financial Coach will be able to guide you through the process of analyzing your spending. They can suggest ways to trim your spending, and help you to create a viable budget. By having professional financial help, you won't feel so alone, and it provides you with a resource for getting your questions answer, as well as receiving helpful advice. Don't put it off - Procrastination is a financial killer. Individuals often want to wait until they are in better financial shape before sitting down and taking a serious look at their affairs. The problem I see with that is; if you continue to do as you have always done, what makes you think your situation is going to improve? Putting your financial house in order is all about learning and changing your approach to handling your money. If you are unhappy with your current financial state, now is the time to take action. WHAT'S NEXT? I hope the information I have provided has helped you to think differently about your money matters. Taking a few simple steps, and focusing on your finances can make all the difference in the world. It's also important to remember that there are no quick fixed, or magic bullets. It takes time to make lasting changes and develop a new financial behavior. Regardless of whether you decide to do-it-yourself, or work with a professional (which I recommend). The time is now. Take that first step today, and start to regain control of your finances (your life). ABOUT THE AUTHOR Barry S. Taylor is the managing partner of Integrated Planning Solutions and Phoenix Financial Coaching. Seeing the need for better financial education and a genuine desire to help everyday families to improve their financial health. Barry is passionate about helping people to discover a better way to approach their finances. Through Integrated Planning Solutions, we can help families with affordable protection to build a financial safety net. Phoenix Financial Coaching offers one-on-one coaching to develop financial strategies based on the family's goals and values.




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