In a perfect world, a finance manager, business manager, or whatever title is given to the person in the back that prepares paperwork will be just that: the person that prepares paperwork.
In the real world, the finance manager is probably one of the best and most persistent salespersons the consumer will ever meet.
They aren’t necessarily bad people. Most are exceedingly friendly and professional, dressed to impress and possessing an easy way that puts people at ease. To a car dealership, the finance manager is the last and best chance the dealer has to make money on a vehicle sale.
There are dozens of methods that the finance manager can make money from you. The good part is that not all of the ways are bad and not all of the products that they will offer are rip offs. In most cases, though, some of the offerings are just not worth the money the consumer will pay.
Instead of going over the details of the different products and suites that aren’t really worth it, here is a short list of items that a consumer should really question and investigate before purchasing:
Undercoating, paint sealant, oil change plans, VIN etching, scotch guard, preowned vehicle leasing, personal vehicle insurance, and tires for life.
There are others that are somewhat legitimate like the ones listed above, and there are some that are downright scams, but we’re here to focus on the potentially good ones.
Dealerships such as Oklahoma City Ford Dealers and other honest dealers around the country offer a basic, short list of products that consumers should consider:
GAP INSURANCE
Some call it a scam, but most who have totaled a vehicle with a lien on it can attest to the wonders of Gap Insurance. In essence, it covers the “gap” between what a vehicle is worth and how much is owed when a car is totaled. For example, if someone totals their vehicle and the insurance company agrees to pay $7,000 while the driver still owes $11,000, gap insurance is designed to cover it. Without gap, the insurance company will be forced to leave the remaining $4,000 to be paid out of the customer’s pocket.
Usually ranging from $300-$700, it is a good investment for consumers who (1) finance vehicles without securing equity by putting a lot of money or trade equity down on the car, (2) drive more than 10k miles per year, and/or (3) purchase new vehicles, especially high dollar ones.
EXTENDED WARRANTIES
Not all warranties are created equal. A consumer who plans on keeping a vehicle beyond the factory warranty should strongly consider an extended one.
Research beforehand into some extended warranties available online for the vehicle you are considering. Know the cost, deductible, what is and isn’t covered, and whether a prorated balance is refundable if the vehicle is traded, sold, or totaled.
Armed with this knowledge, it should be easier to get a good deal on a good warranty, whether it’s the one that the finance manager offers or a separate one.
CREDIT LIFE AND DISABILITY
Most life insurance policies are designed to help with cost of living. Debt should not be paid through standard insurance.
In case of tragedy, having a credit life and disability plan will help to pay off the balance of a vehicle loan. There are few things worse after dealing with a tragedy than to find that the loved one also left major bills and debts behind.
Final Thoughts
Not all “bad” items are that bad. Some may fit into a consumer’s needs. Not all “good” finance items are good, either. The key is to do the research before getting caught off guard by a finance manager ready to spray a $20 can of Scotch Guard in your new or used car for an additional $179.
I hope it helps.
By: J.D. Rucker
Posts Tagged ‘Paperwork’
How Government Contractors Finance Their Deals With the US Government
March 5th, 2010
Many Americans who fully understand that the Federal Government spends billions of dollars each year to run the country, do not fully understand that any “Government Ready” Business can bid on contracts with the Federal Government with very little working capital.
So the question is, how did they start out with very little investment and in some cases, poor credit?
The biggest factor in using someone else’s money to finance your deal with the federal government has to do with the Assignment of Claims Act that Congress passed in 1986 (31 U.S.C.3727) This act states that a “Contractor, or its assignee may assign its rights to receive payment due as a result of performance” to a financing institution. This is what we call the assignment of invoices., known as factoring or accounts receivable financing.
What the government did, was encouraged government contractors to acquire working capital through factoring. Factoring is the selling of your invoices for immediate working capital, rather then waiting 30, 60 or 90 days for the customer to pay you.
Financing companies who handle government contracts are familiar with the procedures to have invoices assigned to them and therefore they are comfortable with providing up 80 – 90 percent of the invoice to the contractor, immediately, once the paperwork is completed.
The Assignment of Claims Act enables government contractors, small business owners, minorities, women and veteran owned businesses to bid on project after project with full confidence that they could handle the cash flow, because of factoring.
Factoring is not available on all government contracts. For instance, it is difficult, but not impossible to find a Factor for construction factoring. And some Factors don’t like to finance contracts until after the work is completed and the government has been invoiced. In other words, there is a difference between financing invoices and financing a job that is not yet completed.
The secret to allowing someone else to finance your deal has a lot to do with what service you are providing for Uncle Sam. Example: Lets say you are providing 100,000 widgets to the Department of Defense. You locate a US company that makes the widgets and ask them for their lowest bid. You may or may not include them as a partner in the deal, but rather as a vendor for you. You bid on the job, you win the bid. Because you don’t have adequate working capital, you have already contacted an Accounts Receivable Specialist who has located, at no cost to you, Purchase Order Financing (PO Funding) and Accounts Receivable Financing. And once you complete the paper work, both of the Financing Institutions agreed that the deal is a go.
The PO Financing pays the manufacture, and the Accounts Receivable Financing provides you with up to 92 percent of the total invoice that the US Government owes you. Both of these transactions must coincide with each other.
Small business and large businesses are bidding on jobs, winning the contracts and repeating the process until their experience enables them to be the lowest bidder, and still show a profit.
In fact some companies open up entirely different division of their company just to accommodate government contracts that no one else is bidding on!
The answer is yes, Uncle Sam is contributing to the profit margin of small businesses owners throughout the US.
By: Cassandra Ingraham
