Now that you have an idea for how interested hybridisation works I like to talk a little bit about financing and how it can be used to manipulate a buying decision.

No doubt you’ve heard or read about these really low grade or at no which was financing for cars and furniture. Well it’s my unhappy task to tell you that there there’s no such thing as zero interest as I said before that money comes from someplace and always at a price.

So therefore loans have to cost something to. So let’s take the case of the no payments for 12 months furniture promotion sales associate tells you that you get $10000 we’re the first today. No payments until next year.

Sounds great all right. Well what if you called your bank and ask them how much they charge you to borrow $10000 for that furniture for say 12 months and let’s say that they said to you that they charge 5 percent interest.

That would mean that the furniture company is eating five hundred dollars five percent times ten thousand dollars.

Really. Five hundred dollars worth of interest in order to make the sale to you. So therefore if I were to make a cash offer of $500 for furniture to be paid up front the furniture company would end up in the same place.

Right. This is why it’s important to know the market value of any type of financing that you’re considering to the extent that you have the cash in hand and it’s earning less on a guaranteed basis than you would otherwise pay to borrow it.

You should consider using that cash isn’t won’t you as you have enough of it to spare to bargain for a lower price.

In fact I would even counter offer even less than $500 that furniture because how can I be sure that paying cash up front isn’t worth even more to the store or that it will really that it’s the lowest price.

Think of it this way. What’s the worst that can happen. The store says no they consider your options. Another storm a city or you may be able to find a better deal online particularly when it’s a brand and model that’s broadly available another financing manipulation has to do with payment durations.

The math behind the loan payment calculation takes into effect at least for variable data points and you need at least you need to know at least three of them to figure out the fourth.

So those data points or the term the duration the interest rate this being charged the about that’s being bar which is known as the present value and then the monthly payment. Those are the four components. Companies that sell high priced items know that the way to make a sale is by pitching their monthly payment not the price of the item itself.

So consequently their sales associates are trained to know how these four data points interact with one another so that they could offer the monthly payment to entice you to buy. So for example if the interest rates reduced then the monthly payment amount will also decline as long as the Mail or the term remain the same or if the term is extended say from three years to five years.

Then the monthly payments is going to decline even when interest rate and even bar remain the same. So you could see that the temptation is to push out the term the duration in order to make that payment appear more affordable when you’ll be able to then protect their profit that’s being made on the sale price and the interest rate.

The key is not to borrow for a term that’s longer than you expect to use whatever it is that you’re financing. Except when it comes to houses it’s because cars and furniture declined in value over time so it makes sense to take their useful life.

That’s a consideration when you’re thinking about how will borrow money for houses on the other hand have historically had lots of their values related to inflation and spent the most recent economic disruptions. So you can safely finance these for long term.

Now that you have an idea for how interested hybridisation works I like to talk a little bit about financing and how it can be used to manipulate a buying decision. No doubt you’ve heard or read about these really low grade or at no which was financing for cars and furniture.

Well it’s my unhappy task to tell you that there there’s no such thing as zero interest as I said before that money comes from someplace and always at a price. So therefore loans have to cost something to. So let’s take the case of the no payments for 12 months furniture promotion sales associate tells you that you get $10000 we’re the first today.

No payments until next year. Sounds great all right. Well what if you called your bank and ask them how much they charge you to borrow $10000 for that furniture for say 12 months and let’s say that they said to you that they charge 5 percent interest.

That would mean that the furniture company is eating five hundred dollars five percent times ten thousand dollars. Really. Five hundred dollars worth of interest in order to make the sale to you. So therefore if I were to make a cash offer of $500 for furniture to be paid up front the furniture company would end up in the same place.

Right. This is why it’s important to know the market value of any type of financing that you’re considering to the extent that you have the cash in hand and it’s earning less on a guaranteed basis than you would otherwise pay to borrow it. You should consider using that cash isn’t won’t you as you have enough of it to spare to bargain for a lower price.

In fact I would even counter offer even less than $500 that furniture because how can I be sure that paying cash up front isn’t worth even more to the store or that it will really that it’s the lowest price. Think of it this way.

What’s the worst that can happen. The store says no they consider your options. Another storm a city or you may be able to find a better deal online particularly when it’s a brand and model that’s broadly available another financing manipulation has to do with payment durations.

The math behind the loan payment calculation takes into effect at least for variable data points and you need at least you need to know at least three of them to figure out the fourth. So those data points or the term the duration the interest rate this being charged the about that’s being bar which is known as the present value and then the monthly payment.

Those are the four components. Companies that sell high priced items know that the way to make a sale is by pitching their monthly payment not the price of the item itself. So consequently their sales associates are trained to know how these four data points interact with one another so that they could offer the monthly payment to entice you to buy.

So for example if the interest rates reduced then the monthly payment amount will also decline as long as the Mail or the term remain the same or if the term is extended say from three years to five years. Then the monthly payments is going to decline even when interest rate and even bar remain the same. So you could see that the temptation is to push out the term the duration in order to make that payment appear more affordable when you’ll be able to then protect their profit that’s being made on the sale price and the interest rate.

The key is not to borrow for a term that’s longer than you expect to use whatever it is that you’re financing. Except when it comes to houses it’s because cars and furniture declined in value over time so it makes sense to take their useful life.

That’s a consideration when you’re thinking about how will borrow money for houses on the other hand have historically had lots of their values related to inflation and spent the most recent economic disruptions. So you can safely finance these for long term.