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If you already know the concept of Perpetuities, the concept of Annuities is very easy. It’s very similar to Perpetuities, only that the payments are not forever. Instead of forever, these payments come in only for a fixed time period.

Let’s say I gave you a piece of paper or certificate, and it promised that I would pay you $10 per year for exactly 12 years, and then I would stop paying you immediately after that. Is this still a “perpetuity”? It still consists of regular payments of equal amounts, just like a perpetuity, but it is not forever; it has a limited time period. So in this case, it’s not called a perpetuity, but an “annuity.”

So now, just like in the case of a perpetuity, an important question now is… how much are you willing to pay me for that piece of paper? How much are you willing to pay for this “annuity”?

For this, you would use the Present Value of an Annuity Formula. For general managers, there’s no need to know the actual step by step process on calculating this, as it can easily be done by accountants or by free calculators online as well as smartphone apps. However, if you need to learn the process yourself, you can watch tons of free online tutorial videos from many different websites as well as YouTube.

Real-Life Application

Let’s say you are offered to invest your severance pay (or retirement pay, or similar lump sum) of $10,000 with a pension company or investment company, and they promise to pay you $600/year for 30 years. An ordinary person might think it’s a good deal because $600/year x 30 years = $18,000, which will be much more than the original $10,000 investment.

However, using the Present Value of an Annuity Formula, you will find that the “fair value” of this annuity is actually only $9,223 if interest rates are at 5%… and that you are therefore “overpaying” if you pay anything more than $9,223. In other words, if you pay anything more than $9,223, then you’re just as good or even better off putting your money in the bank instead, and earning interest from the bank (or other “risk-free” investment). At $9,223, the rate of return of your investment/pension will be exactly equal to the rate of return of putting your money in the bank. If you pay more than $9,223 for your investment, then your investment’s rate of return will be lower than your return from the bank.

It is healthy to negotiate before financing a car. Instead of negotiated value of the vehicle, some dealers try to charge for the Manufacturer’s Suggested retail price (MSRP). Some dealers may mislead you to believe that factory- to- customer rebate is a part of their dealership discount and they need to subtract it from the MSRP. And then they announce that the negotiations are over. Dealers are already earning from their holdback checks. Right on the offered rebates go to the consumers and are not to be subtracted from the MSRP. Always have an eagle’s eye before going for the financing.

Special financing is offered to those who pay at least 20% in cash. You may carry this cash for your down payment. In case you are also opting for the same then you can save your money over the course of your loan.

But in case you are going other way round like if you are in short of sufficient cash foe your down payment then you may apply the rebate to the cash down payment. Ensure the applied rebate should not get deducted from the MSRP.

There is a way to get the deal with rebate on the paper. The dealership sums up the negotiated purchase price with the applicable taxes, license fees, document fees etc. And then all the rebates and the cash that you have submitted before will get subtracted from the total giving you the final price as your balance amount.

When you are sure that you can adorn your home with a car then it will be the best time to buy it. To escape from the dealer tactics, safest and the best time to go for the desired deal is at end of the month. It is so because the dealerships generally submit their sales report to the manufacturer on the monthly basis. Not all that glitters is gold. We fall for advertisement and discounts that are published in the paper with expecting to get a better deal. It can be unhealthy for the Auto enthusiasts. We should go for this step when we are planning to have year-end model closeouts. When a new model comes out, it depreciates the old year model value and perhaps your savings.

Common Dealer Tactics

There are many tricks that a dealer employs to befool the customers. Some of them can be:

The guilt trip

Generally, a dealer keeps his desk covered with the photographs of teenagers and children. A good sales person tries to influence the customer emotionally to stop him negotiate further. The sales person basic meaning is if the customer tries to bargain more and more it will directly affect their salary and ultimately to their source of income. Where the question of family and children comes many of the customers lend a soft corner for the sales person feeling guilty to hack away at their commission, which they might need for running their homes.

The lost keys routine

You get your car keys by the sales person, when going on your test drive. You like the car and start negotiating about its price. But if the negotiation is not serving your interest and you want to leave, then this is the time when sales person tries to run their defined tactic. They will mislay the keys. Then an intensive search will be held by the car manager and in the meantime, the concerned sales person will try to make the customer ready to buy the car. This led you to spend more time at the dealer’s counter. This way you are serving their purpose as a sales person are well versed to befool the customer either this way or that.

Once a sales person gets a hint that a customer is not getting trapped in their laid net, they start their procedure in a pre-defined manner. They start giving you the details about all the schemes and discounts associated with that product. To your surprise, these offers get approved by the manager. Nothing is going from their pockets, but you are surely wasting your time over there. You can escape this wastage by letting the sales person know that you want to have words directly with the manager and that also within the given time duration. In case you are still kept waiting then you must leave the place.

Monthly Payments

Sales person starts the deal with the discussions about the monthly payments. They usually employ this trick to influence the customer. At times, they succeed in their trick as every one is interested in getting known about the money they need to spend. They will begin lowering the said amount if you will not get lured by their offered payments. Do not allow them to influence you with their oily tongue. You may tell them that you only want to get involved with the dealer asked price. Let them know that you are surely interested in owing a vehicle but on fair terms. If still your sales person become stubborn is not telling you about the dealer’s invoice then you may go at another dealer’s counter.

Good Bargain- Start with the invoice price

You may start negotiating from the invoice price instead of beginning it from the sticker price. In case you are looking for a vehicle in short supply then you may take notice of MSRP in other cases you may ignore the MSRP. At times the demand for a vehicle like a sports car may exceed the supply, and then the dealers do not feel pressurized to sell any vehicle for less than MSRP. They serve their purpose especially in case of the cars that are hard to find.

You need to do an intense research about the dealings as knowing about the 2% to 3% holdback payments to dealer by the manufacturer may get you the best deal. Being dear to the manufacturer, high-volume dealerships are eligible for the incentives and discounts. Your little compromise can get you the best deal. You may allow the dealer to add some advertising costs to their invoice totals and show them that you do not have any kind of objections in their earning reasonable profits. Let them know that you are mainly interested in their asking price that should be based on dealer invoice.

Going for negotiating from dealer invoice allows you to save your time and money in actual price negotiations. In case the dealer responds with lower prices, you may offer higher prices and vice-versa. You may keep your price increases under $100 a crack. To keep the dealer in confidence, you may repeat that you want to have a car in next few days.

Going for haggling in case of Used Vehicles

There is no dealer invoice in negotiations for a used car price. However, negotiations for a used car and negotiations for a new vehicle share the same features. Dealers calculate every single expense follow on fixing up a used vehicle. The only remaining fact is that they will never show you that worksheet. As a matter of fact, the franchised dealers make most of their profit from the sale of a used car. They usually offer factory certified used vehicles. These certifications are as good as warranties offered by third party. It is always safe to visit a specialist dealer to get bargain on buying of a used car as they do not make much profit but just see to the fact that their overhead expenses are less. Their offered warranties do not sound good as they exclude repair facilities.

If a person is well versed in his research related to the desired vehicle, then he will surely get a best deal. Your mechanic reports should be well equipped with the significant data. In case your mechanic has already proved the purchase then you may go for selecting other cares if the deal is less favoring you and more to your dealer. If you think that your desired used car needs some repairs then you should always deduct the repairing costs from the cost asked by the dealer. It depends on your haggling skills. You may start with subtracting 80% or 90% of the repair costs from the asked cost and may vary it to the 100%.

Acceptable Deal Best Deal

Dealers Asking Price: $10000
Repair Estimate : – $1800
Sub Total: $8200

Fair Market Value: $9400
Repair Estimate: -$1800
Sub Total: $7600

You may show off your mechanical skills to the dealer. This way you have the best deal ahead of your way. If a dealer is asking you for the $10000 with a fair market value of $9400 but in case you think that your repairing cost will turn out to be around $1800 then start with offering the dealer $7600. If still the dealer is not ready for the offered payment then you may increase the amount to $100 but not more than this. In case the settlement is not coming on the way as you desired it to, then you may see the next dealer. Just leave your contact number.

The End of Choices

Finally, you have decided to buy the car. So, first think of your preferences and budget. This helps you a lot in compressing the huge list into small one. Now, you have decided for a brand new car. Do not waste your time in thinking. Simply, log on to a relevant site and find out the latest details about the car. Along with the internet, also visit local dealers of that car. Try to get maximum information, as it will help in attaining the conclusion. Write all the details of this vehicle along with other vehicles in a notebook. Compare notes of both the vehicles.

Compressing

At this stage, you must have driven all the desired vehicles of yours. Suppose you have compressed the choices to two vehicles. Take a drive of both the vehicles on the same day. Observe both the vehicles carefully. Select one that makes you comfortable, as well as suits your lifestyle. Along with the cost, that matches your budget. The most important things to consider are the safety equipments and the gas mileage. Buying a SUV means you must have an appropriate garage. The length of new quad-cab pick-ups and SUV of long wheelbase are more than 18 inches.

After a lot of consideration, you will decide on one vehicle. The work does not end here. You need to begin your research on pricing.

The Cost

On the internet, you can simply get the invoice prices of dealers for the new vehicles. If you want to buy the vehicle from an online catalog then log on to reliable sites.
There is no harm buying from internet. Otherwise, the local dealers are always there to serve you. You can also get information about insurance. Thus, making you capable of knowing the over-all cost.

Cost of Used Vehicle

The vehicle’s market value resides between the selling prices in retail and its wholesale value. According to IRS, Market value of the vehicle is the price that both the buyer and seller are willing to buy and sell, after having relevant information about the vehicle. Moreover, there is no compulsion, neither on buyer nor on seller. If you want to know the rate of used vehicle then it need some kind of research. You can easily find out the rates of used vehicle through an online catalog.

Settling your debt with your creditors is a viable option when it comes to getting out of debt. So how do actually settle your debt you may be wondering? There is a skill when negotiating and you should have an outcome in mind before you start negotiating with creditors. First you need to know how much money you have to work with and you need to know what to say and what not to say.

Most creditors are willing to settle and actually have a department assigned just for that purpose. The best way of gaining a good settlement offer is by having a compelling reason such as a medical condition, change in income or something other than over spending. Another thing that can have an impact on the outcome of the settlement is if you had cash advances on your account that you are negotiating. This could have a negative impact because most creditors are not willing to settle low on cash advanced balances or what’s commonly referred to discounted cash.

If your balance is mainly purchases that you have made the better your chances are to get the debt down to let’s say 20 cents on the dollar. Example, if you had a balance of $2,000 you could expect to settle for $400. You may want make an offer through the mail although this is not as effective and you lose the negotiation power of direct communications.

There are programs that can teach you how to negotiate, and it is worth considering because most professional negotiators get a third of what they save you. For instance let’s say you hired a professional negotiator and the balance of your debt was $35,000 and they were able to negotiate the debt down to $7,000 that would be a savings of $28,000. Their fee would be based on a percentage of the $28,000 they saved you which their fee would be $8,680. Now the total payback amount would be $7,000 debt + $8,680 fee= $15,680. Now your actual savings went from 20% to 45%. Now imagine if you were able to do the same thing with proper coaching. Let’s say the program cost $200 now you’re looking at an additional savings of $8,480.

You do have to consider the time that this will take you, however the reward of the education and the lessons learned could be priceless. If you feel that you are not capable of negotiating your debts on your own then you may want to hire a professional but at least negotiate their fee up-front down to a flat 10% of the total debt. Also make sure you never pay upfront fees and you do your proper due diligence on the company and make sure they’re reputable. A good start is to check them out with the Better Business Bureau.