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.
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Faith for Finances: Sowing and REAPING! We are in our series, Faith for Finances and today we are talking about sowing and reaping. Our scripture references are Genesis 26:1-6, 12-14 and Mark 4:14-20: Genesis 26:1-6 And there was a famine in the land, beside the first famine that was in the days of Abraham. And Isaac went unto Abimelech king of the Philistines unto Gerar. And the Lord appeared unto him, and said, Go not down into Egypt; dwell in the land which I shall tell thee of: Sojourn in this land, and I will be with thee, and will bless thee; for unto thee, and unto thy seed, I will give all these countries, and I will perform the oath which I sware unto Abraham thy father; And I will make thy seed to multiply as the stars of heaven, and will give unto thy seed all these countries; and in thy seed shall all the nations of the earth be blessed; Because that Abraham obeyed my voice, and kept my charge, my commandments, my statutes, and my laws. And Isaac dwelt in Gerar. Genesis 26:12-14 Then Isaac sowed in that land, and received in the same year a hundredfold: and the Lord blessed him. And the man waxed great, and went forward, and grew until he became very great: For he had possession of flocks, and possession of herds, and great store of servants: and the Philistines envied him. Mark 4:14-20 The sower soweth the word. And these are they by the way side, where the word is sown; but when they have heard, Satan cometh immediately, and taketh away the word that was sown in their hearts. And these are they likewise which are sown on stony ground; who, when they have heard the word, immediately receive it with gladness; And have no root in themselves, and so endure but for a time: afterward, when affliction or persecution ariseth for the word's sake, immediately they are offended. And these are they which are sown among thorns; such as hear the word, and the cares of this world, and the deceitfulness of riches, and the lusts of other things entering in, choke the word, and it becometh unfruitful. And these are they which are sown on good ground; such as hear the word, and receive it, and bring forth fruit, some thirtyfold, some sixty, and some a hundred. I wanted to talk mainly today about the reaping side of sowing and reaping. A lot of us sleep on the reaping aspect and then get discouraged from sowing in the first place. The offering period is not a time we look forward to in church and we don't want to send anything to any ministries either. We get discouraged about our own lack. We get discouraged that the manifestation of the blessing hasn't happened for us. The real issue is that we don't look at sowing and reaping as we should. We think sowing and reaping is a magical kind of thing. We feel like, if I put this money in church, everything in my life is going to be wonderful in the next moment. A lot of times when we sow, we're hyped up, we're in an emotional state, and we're excited. I'm not saying that any of that is bad. In fact, the excitement is good; our faith is stirred in that moment. However, the problem is that we don't stop to think about how to actually live this thing out. This is not just true of sowing and reaping, but it's true of everything in church. We get excited while we're there on Sunday, but then Monday rolls around, life shows back up, and the thrill is gone. (Sing, B.B.) What we have to do is reproduce that thrill in our everyday lives. The Word has to become flesh in our lives. No farmer plants seed and then goes home and forgets about it. He tends his crop and when the harvest is ready, he goes in and reaps it. Did you just stop with the planting of the seed? If so, insects and animals are going to come in and make that crop theirs. The Enemy will come as we see in the book of Mark. The devil comes immediately to steal the Word that was sown into our hearts and to discourage us and to make us think it was a lie. So, we have to have some standing power after church is over. When we come out of the church setting, we gotta do it. We gotta stay with it, we gotta believe that it is true and we gotta stand guard against the Enemy. We gotta stand there flat-footed and say, "I'm not moving until I see it come to pass!" You gotta get serious about this thing. If you want to flow, if you want to live in the blessing, then you're gonna have to stand on the Word. You have to take God's Word as being true and when the Enemy comes in with everything that he has, you have to stand. We stand by continuing to speak the Word over our situation, pray prayers of thanksgiving and sing songs of praise. In other words, we recreate, as much as possible, the atmosphere that we sowed into. Then we go to church and conferences, etc., to charge our faith and strengthen us to reap our blessing. The behind the scenes side (spiritual side) of reaping involves running off the adversary, God getting things aligned with whoever else is involved in your blessing and you getting instructions on how to actually receive the blessing in the natural. This behind-the-scenes spiritual warfare is not much unlike the farmer tending the crop, keeping away the insects, animals and weeds, etc., and making sure everything else is in place for the crop to come in and of course, having the wisdom (instructions) on how to actually harvest the crop. Oh, wouldn't it be so nice to just sow a seed and forget about it? Unfortunately, it doesn't work that way. You have to see it through. If you're determined to see it through, you'll reap. You'll reap if you faint not. (See Galatians 6:9) Sow in famine? In Genesis 26, we are looking at Isaac's life. The thing that is key is that Isaac obeyed God. God instructed Isaac to not go into Egypt, but to stay put. It would have made sense to go to Egypt because it was in a better economic position. The land where God told Isaac to dwell was in a famine. However, Egypt is a type of the world. So, in essence, God told him, "Don't go to the world and get the world's way of doing things. Stay with me and do what I tell you to do." Isaac did just that and he was blessed tremendously. He sowed in the land where God told him to stay and he received a hundredfold return. Additionally, he lived a great life and not only survived, but thrived. This is God's will for us, too. We've been in a time of famine with the Recession and its aftermath. However, we're not limited by those things that limit the world. We're not bound by the things that bind the world. The world doesn't dictate how we live. We're Christians. So, whatever the season is, we live well. Why? Because we are seeking first the Kingdom of God and we are obeying him. Because we're on the Lord's side, we're on the winning side. However, if we get off of his side and start doing what we see our neighbors do, then we're gonna get what we see our neighbors get. We don't want that. I know you want to be friends with your neighbors; you want to fit in. You don't want to stick out like a sore thumb and be talked about by them. However, look at what they have and ask yourself, "Is that what I want? Do I want a day filled with strife? Do I want a life without peace? Do I want to not be able to pay my bills?" Is that what you want? I'm sure it isn't. Stay on the Lord's side and allow those neighbors to see how well you live and then they'll want to come over to the Lord's side. It'll be a witness unto them. When they start asking you how you do it, you can tell them, the Lord did this; God did this for me. Then they can go to God and be blessed, also. Eventually, the Philistines had to call Isaac blessed and acknowledge his God. They envied him and did things to hurt him, but eventually called him blessed. You're making an investment in YOU Let's talk about the reaping side. To reap, you have to use your faith, you have to speak the Word, and you have to do practical things. People think that sowing is like losing something. They think, "I'm giving this money and I'll never see it again." You don't want to ever think about it like that. You always want to think about it as making an investment. Of course, make it into good ground. A lot of times we think, "I don't want to give the preacher my money," because you feel like they're going to be a crook. There are some crooks out there; don't give your money to the crooks! Let God show you where to sow. If you seek God and obey Him, He'll tell you where to sow. The whole key again is obeying Him and doing what He says. Yes, you will want to put your money into good ground; you don't want to waste your seed. So, you trust the Spirit of God, even when it doesn't make sense. Even if you think they could be crooked, but you know God is telling you to sow there, obey God. (Kind of like when Isaac sowed in a famine.) God knows something that you don't know and He will work it out for you. However, if you know beyond the shadow of a doubt that it's crooked - you saw the pastor get handcuffed and taken downtown - then you know what's going on. Don't put your money into bad ground. Just always obey God and don't go on what you think may be going on, because in that case you'll always talk yourself out of sowing. I remember when God first start dealing with me about sowing. It was the early 90's and I didn't know anything about sowing and reaping. I grew up in a church where we just gave a dollar in the main offering. Before the main offering, we had the Benevolence Offering, which we referred to as the "penny offering," because people just put pennies and other coins in it. After the penny offering, we marched around the front of the church and put a dollar on the table. When God started dealing with me about sowing, He told me to give $100. I was taken aback. I thought, "What?!" Actually, He told me to take $100 and sow into five different ministries. So it was only $20 for each ministry; however, that was still a big jump from a dollar! I really thought, "This can't be God talking to me. I must be making this up." As I stated in the last blog, I'm more of a saver than a spender. So, after God told me to sow, I looked at my checking account balance and I didn't have enough left over to sow $100 after I'd paid my bills. So, I thought, "Whew! That was just me, it wasn't God." (Really, Trish? You? For real?... ) Then I heard Him say, "You have it in your savings." Whoa. Before I knew it, I was speaking with my grandparents' Louisiana Creole accent and I exclaimed, "Mais, non! Mais, that's my money, wuh!" (Loosely translated: Oh, no! Don't you know that's my money?!) I couldn't shake that it was the voice of God, so I went ahead and sent the offerings. The very next day, I got a check for $700! It was a tax refund check; however, I was not expecting it to come as early as it did. So, I definitely didn't miss the $100 that I took from my savings and I had instant increase! Most importantly, God showed me what He could do through my obedience. I was so happy! He also blessed me with more than money and that blessing is something that I'm still benefitting from today. One of the ministries he instructed me to give to was Kenneth Copeland Ministries. After I gave to them, they put me on their mailing list and started sending the "Believers' Voice of Victory Magazine." However, all of this was unbeknownst to me. The magazine arrived one day out of the blue. I just so happened to be teaching "The Coming of the Holy Spirit" to my Sunday School Class. I always read other materials to supplement the Teacher's Guide. In the magazine, there was an article by Gloria Copeland, entitled, "Why Tongues?" The night before the magazine came, I read a minibook by Kenneth Hagin entitled, "How to Receive the Holy Spirit." When I read it, I thought, "WHAT does this have to do with the coming of the Holy Spirit?!" Then here comes Sis. Copeland's article, "Why Tongues?" Long story short, I caught on that God was "dealing with me again." Although, I didn't dare teach "tongues" to my Sunday School Class (I did later), I did receive the Baptism of the Holy Spirit before the end of the weekend. My whole life's trajectory changed in that moment. So, the whole while God was "worrying me" about sowing, he was just trying to bless my ignorant self! Obey God. We're going to stop here and in next month's blog, we'll talk more about reaping, so that you can get your harvest in. I have several scriptures for you that will call it forth! I would be remiss if I taught on sowing and reaping and didn't give you an opportunity to sow. Listen to God's instructions about sowing into this ministry and obey Him. This ministry is good ground. Everything done here is to help you and others live successfully, based on the principles found in God's Word. Some people don't realize that having a successful life and living for God can co-exist. However, Jesus came to save us AND give us life abundantly. (See John 10:10) So, listen to God and sow your seed by clicking below. Thank you for your support that keeps this ministry coming to you and others in need around the world.




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