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Financing the Purchase of a Car

Buying a car is usually the second biggest investment in a persons life, and financing the purchase of a car is commonplace now days, especially if the vehicle in question is of any substantial value. For most people, buying a new or used car of any worth outright for cash simply isn’t possible, and so car finance gives you the option to purchase, and ultimately own a vehicle that you may not otherwise be able to, much like how a mortgage is taken out to pay for a house.

Even if you do have the savings, or means to buy a car out right, it is still sometimes a more sensible option to finance the purchase, as it allows you to release your money bit by bit in a controlled manner, instead of having all of it tied up in a vehicle, that could potentially get stolen, written off or simply depreciate in value considerably.

The car finance industry is massive and if you are considering financing the purchase of a new car, there are a number of things to consider and be aware of, in order to help you get approved car finance. There are a number of different sources to apply for, and obtain car finance, with the obvious one being from the vehicle dealership itself, but you could also obtain finance from the major banks and online financial institutions and companies.

Financing the purchase of a vehicle through the dealership is usually the most convenient option, however there are a few things you should be mindful of before approaching one. Financing through a dealership can often be ‘high pressure’, this is usually because the salesperson will be working on a commission basis so will be pushing for certain add ons and packages that, on the outset, may look worthwhile, but ultimately may end up costing you considerably more. Things like insurances, extended warranties, and extra options for the actual vehicle itself to push the sale value up are all examples of these commission based ad ons, and if you are financing, it can be harder to see the extra amount these things cost as they are effectively ‘hidden’ and divided over the monthly payments, or term of the loan.

Obtaining car finance away from the dealership with a bank or online institution can give you more control without the pressure of the sales push, and, once approved, you then have your budget and know exactly how much you can spend, which again, gives you more control when negotiating a price with a salesperson. However, because the finance has nothing to do with the dealership, or wherever you’re actually purchasing the vehicle from, you may not get as much support and after sales care as you would if you financed the purchase through them.

When applying for vehicle finance, there are a number of different factors that determine whether you get approved, and if you do, what rate you will pay. Interest rates can vary vastly and probably the most influential factor on the interest rate offered to you will be your credit history. Put simply, the better your credit rating, the lower the rate will be, and the worse it is, the higher the amount you pay back to the lender will be, due to an increased rate.

Another major factor impacting on the interest rate of car finance is the term of the loan – i.e the actual time period it will be paid back over. Usually, the shorter the period, the lower the rate, and it increases correspondingly as the term period is extended. Also, if you are wanting to finance the purchase of a used car, you will probably have to pay a higher rate than if you are buying a brand new vehicle, so this is an important factor to consider before buying. Your address and geographic location can also have an influence on the interest rate offered, as can your profession, and work history etc, so when applying for car finance, be prepared to answer a number of questions based around these areas.

Before going to a dealership to purchase and finance a car, it is a good idea to do some research and be aware of current rates and offers from competing companies and banks so that you are not entering into it completely blind, and can bring then up during the application process if necessary, to aid you in any negotiations.

When financing the purchase of a vehicle of any substantial value, you will most likely have to pay a deposit up front, which will represent a minimum percentage of the overall value of the vehicle, and demonstrates your commitment to the lender and the dealership, as well as helping to cover any admin costs etc. It is always advisable to put down as much as you can afford on the deposit, especially if it is an expensive car, as this will help to lower the monthly payments, give you a little breathing space and control, lessen the likely hood of you going into negative equity if you want to get rid of the vehicle, and also increase the likelihood of you getting approved for the car finance in the first place.

This is probably the most important thing to consider when financing the purchase of a valuable vehicle. If, at some point down the line of the agreement, you become unable to continue paying the monthly payments, or if you simply don’t want the car any longer for whatever reason, you want to either effectively be able to hand it back to the dealership without owing anything outstanding, or to sell it yourself privately without having to cover any potentially sizable negative equity before doing so, and it is your initial deposit that can help prevent this from happening in most cases.

It is never a good idea to finance the purchase of a car with a very low, or even nil deposit, as it will likely result in your payments being much greater, and if you want to release or sell the car you could very well still owe the lender more than the current value of the vehicle itself, as many vehicles (especially brand new ones) can depreciate in value considerably and surprisingly quickly after the purchase, so put down as much as you can up front to cover yourself for any such eventualities.

Before committing, you should ensure you are completely aware of the total financed amount as this will properly illustrate to you the amount you are ultimately paying for the car and whether it is actually worth it or not. Generally speaking, you should consider car finance as long as you can obtain a competitive interest rate and sensible terms that will allow you to comfortably afford the monthly payment, and you should also be able to comfortably put a decent deposit down up front that represents a substantial percentage of the overall value, and to finally remember that even if you can comfortably afford the deposit and monthly payments, whether or not the overall financed amount is actually representative of the actual worth of the vehicle you want to own.

Is Your Online Business Making This Mistake?

You have a good website, you are focused on your product, you work hard at the business and yet your website is not delivering the expected… What went wrong?

Mike Carlson (name changed) had a website that was perfectly in all aspects- it was running well, looked good and it was even on page one for some keywords. Yet he was getting practically no traffic and his conversions were abysmal.

Mike is no exception. There are plenty of entrepreneurs with online businesses who are unsuccessful in attracting traffic.

Mike just failed to plan well.

What Mike planned was that “I will sell this product, target this keyword and have an online shopping cart for 24 hour accessibility”

Mike failed to plan a strategy. He did not plan how to achieve his targets. He just planned what he wanted to do.

“Failing to plan is planning to fail”,you’ve heard this before. This is particularly true for businesses and no prizes for guessing; this applies to online business too. If you have decided to do business online and you have no plan, you are doomed to fail. Online business plans must be focused on all business activities which will lead you to your goal, help you to reallocate your resources to optimum use, analyze and make corrections & adjustments to get back on track if you ever deviate from your goals.

In the world of e-commerce you need specific planning

- What ecommerce business do you want to start?
- Is there a demand for the product?
- Is it too niche to generate revenue?
- How much revenue do you plan to target in the first year of business?

The above questions will help you decide the selling price and the number of people who must purchase your product for you to achieve the target. Your conversion rate will more or less depend on the conversion rates of your industry.

Once you get an approximate figure you can calculate the number of visitors you wish to browse your site. Then to need a workable plan which will get the required number of people to your website. This means that you much finalize what phrases are being used to search for the product and target the ones relevant to your product and traffic estimations.

A proper business plan will establish your business goals and eliminate unrelated unnecessary activities. After asking yourself the above questions you have a clear view of what you want from your online business in a given timeframe.

Online business plans may differ but there are a few broad guidelines which all such plans should include. They are knowledge of your market, content management and integrating your website design with SEO. Once you have the idea of a niche item you want to deal in you need to find the market for it. Then you need to refresh your website content periodically for search engines to fall in love with you. Your website planning, development, management and marketing strategies should be integrated with your business model for perfect harmony between each other.

An analysis of Mike’s business was that he just started selling products outright, targeting low traffic keywords and not finding the right people or the right market. In fact he was selling niche products to a generic audience. He did not research and did not plan long term He just focused on the present.

Know your customers

Here is some basic information that is needed before you launch your online business:

1. Who is my prospect?

- Demographic information

a. Where do they live?
b. What is their income group?
c. What is their age group?
d. What is their family size?
e. What is their profession?
f. Psychographic information
g. What is their lifestyle?
h. What are their beliefs?
I. What are their radio/TV watching habits?

2. Product usage information

- What is their hot button issue that your products or services address?
- How do they use your products/services

a. How much?
b. How much money do they spend?
c. What are their expectations from the products/services that you offer?

3. What is my prospects internet usage behavior?

a. What percent of your prospects look for your product/service on the internet vs. Yellow Pages?
b. What keywords or key phrases do they use to search products or services that you offer?
c. What percent of your prospects purchase your product/service over the internet?
d. What makes them decide to buy on the web vs. in store?

The plan for online business is very different from the plan for normal brick and mortar business. This business runs 24×7 non stop and closes as and when you, the business owner wants.

Focus on the customer

- What benefits do my products give my customers?
- How can I maintain their satisfaction levels?
- Why will the customers buy my products?
- How do I reach my target customers?

These are some questions which should be answered by your online business plan. Traffic generation is very important for this business and you may opt for free (article, blog, forum marketing) or paid (solo ad, Pay-per-click marketing, SEO) methods to generate more and more traffic.

The goals in your plan should be realistic, measurable and appropriate to your skill level and time scale. Your plan should include the details such as start-up costs, labor needs product quality, competition, the size of your potential market, profitability, necessary product support, legal issues and regulatory concerns, associated costs like shipping, inventory and repeat business potential and cross-selling potential.

Keep asking yourself these questions…

- How many visitors are coming to the site?
- How many visitors are new vs. old?
- How long does each visitor stay on your site?
- What does each visitor look at?
- What graphics, words, pictures, etc are generating the most responses?
- Which search engines are getting you the best prospects?
- Where else are your customers coming from?
- How many pages does the visitor look at?
- What are your website rankings?
- How much money have you made from the average visitor?
- Who are your biggest money-making customers?
- If you use PPC is it working and paying for itself?
- Which links are bringing your visitors and are they converting to customers?

Last but not the least, online business should invariably be related to something you love to do. The product or business should have an attraction value for you which will help you to not get bored while the time flies. A majority of businesses fail during the first two years after inception, mostly because its owners are no longer willing to put in the work needed to make it grow. By picking an area in which you have a natural affection and aptitude in, you will increase the chances of making your online business more than just passing fancy.

So get going and don’t forget to fail to plan a complete strategy.

Copyright (c) 2009 Ajay Prasad