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Finance tip: Shopping
Get pre-approved finance. For big purchases that usually require some form of financing (like a house or car), try and get pre-approval from your bank or financial institution before you go out hunting for what you want. This essentially means that you get a letter from them stating what amount you are able to buy up to, and that you are ‘pre-approved’ for that amount of expenditure. While this might seem like a backwards way to go about it (you normally find what you want first, don’t you?), it definitely has its financial benefits.
Firstly, by taking this measured approach, and speaking to your bank early on in the process, you may get a better rate or deal, as they can see that you are approaching the purchase with a clear head. Secondly, you also get a clear, realistic picture of what you can afford, which stops you from over-committing yourself to a purchase that’s really beyond your reach. Thirdly, and most importantly, though, it can get you a much better price from the seller. By walking in with a pre-approval in your hand, you are showing the seller that you aren’t just wasting his or her time, and that you are actually in a position to buy whatever it is they are offering. This then allows you to offer a bit less than the asking price, and increases your chance of getting them to sign off at the lower amount. This is because the seller knows that he/she won’t have to mess around waiting for finance approval, and could have a completed sale there and then. Essentially, it’s the ‘bird in the hand’ theory: They can take a bit less, and be guaranteed a sale; or hold out for their asking price, with no guarantee that they’ll actually get it sold. From experience, if your lower offer is still reasonable, the seller will go for it – especially in a tough market like the present!
Business tip: Etiquette
With a long finance tip, we’ll keep the business tip short this week! Never keep people waiting if you've set up an appointment/meeting at a specific time. It sends the message that you don't value their time, and this could lead to a negative business relationship. This is especially the case if you’ve asked for the meeting, and they are ‘doing you the favour’ by agreeing to it. For important appointments, make sure to build in some buffer time before/after the scheduled times, particularly if you have to travel to get there. If there's an emergency, and you can't help being late, always phone ahead to apologise - they could use that extra time to do something productive instead of waiting for you…
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