0% APR Promotions and Other Misleading Offers – Episode 360

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[00:02] On the Prosperity Podcast, we’re going to be talking about 0% APR promotions. And Kim, this is one that is popping up because of the financial situation throughout the country. Are you seeing it as well? Yes. In fact, I have a story to tell about it already just as of two days ago. My sweet sister who has her own business and a good head on her shoulders calls me all excited because she’s gotten a bug in her ear to get new furniture, and the furniture stores, and fill in the blank, it could be the car stores, it could be a variety of other things, are offering this 0% deal or I think the way hers was worded was 72 months, same as cash or no interest only. Those are some of the terms that are thrown out there.

[00:53] Correct? Are there more? There are probably more, but I think we’ve seen it cat skinned a million ways. Well said. I said to her, okay, and I’m going to take a quick bunny rabbit trail here. This is one of those times where I wanted to say, ah, haven’t you been listening to what I’ve been saying our whole lives? Aren’t you reading my stuff? Haven’t you been paying attention? But I said, no, no, that’s not going to be helpful. Take a step back, take a breath, Kim, slow down, Kim, and say, oh, that’s interesting. Well, are you aware that when a furniture store says something is 0% interest, that what they’re actually doing is taking the price of the item and they’re adding interest to it and then they’re dividing that total out by however many months they said you

[01:56] could have this thing and they’re calling that 0% interest. So I found this setup of are you aware makes people relax and it’s not me shoving my information down their throat and I find that people are a little more open-minded at that point. So do you have a little phrase that you like to use Spencer when you are wanting to help somebody with something and wanting to help them see it kind of in a different light? Do you have a little phrase that you use? Yes, I do. In fact, what I do is I say, have you thought about and then I start going that way. Perfect. So are you aware? Have you thought about? So the example that I gave Tammy is I said, let’s say that you want to buy a couch and you ask them the all cash price

[02:49] and it’s $6,000. And on another day, same exact couch, they tell you that the no interest cost couch is 7,200. And if pay it per month, it’s just $100 a month for 72 months. And this is what they’re doing is they’re taking that $1,200 difference. So 6,000 up to 7,200 and adding it to the cost of that couch. In fact, what would happen is they wouldn’t focus on the 7,200. They would just focus on the $100 a month. And that’s where people get stuck. They hear no interest. They hear I can do a hundred bucks a month and isn’t this cool? I can take 72 months to buy my couch and they don’t do the rest of the math or the rest of that critical question asking, which is how much would the couch be if I paid for it in cash today?

[03:56] Now cash today might have to mean literal. It might have to mean you write them a check. It might even mean you can put it on your own credit card. But do be aware that business owners have to pay a fee to use a credit card. It’s why when you go to the local coffee house that they don’t want to put, I mean, the bigger ones will do it, but the smaller like locally owned ones, they don’t want to put a $3 coffee on a credit card because the 3 to 6% cost on that $3 item is hefty. And so when you’re talking to the furniture guy, you might have to write them a check or like literally give them cash in order to get the best, best, best price for that couch. Yeah, absolutely. You know, there’s a really good

[04:46] way to put it. You know, oftentimes what you’re talking about, this is used in the auto and auto finance world. And so, you know, car dealerships do this all day long where they’re managing different numbers so they can manipulate the final outcome. You’ve probably seen this. Have you seen YouTube videos or heard about this as well? Yeah. Oh, yes. Drives Todd and I crazy. Whenever he sees it, he goes home immediately and runs the numbers and says, nope, it’s not truly no interest. Now, there is a chance, Spencer, in another, I’m guessing, three, four or five, six months that there may truly be some honest full disclosure, the whole truth, no interest, 0% financing. But right now, that’s misleading. It is absolutely. And so what happens, you know, like on a vehicle,

[05:40] they’re going to manipulate what the trade in value is or the terms of the loan. Then, you know, when we talk about, you know, the furniture is a great example, you know, $7,200, $100 a month, but there are a lot of other invisible costs. And to understand the equation, see a furniture company, they’re really not a furniture company. They’re a finance company that sells furniture. And so when we understand what game they’re playing, then we can use that to our advantage. And the car dealer, same thing. If you look at a car dealer’s balance sheet, you know, income statement, you dig into their financials at all, they make massive amounts of money from the financing of those vehicles. And so what happens

[06:26] is the manufacturing division says, OK, we have a $30,000 car here, and we need to sell it for $35,000 to make a profit. And then the finance division gets it and says, OK, here’s our $35,000 car, and we’re going to add a rebate of $3,500 or $4,000. Or we’ll just add the $4,000 interest and call it a $39,000 car. Yes, so true. How can we take this conversation of the furniture 0% APR and think of it and construct a prosperity win? What do you think from this? I would love to kind of explore it on that path. Well, it’s an opportunity because these furniture stores are just now opening up as we talk here in the middle of 2020. And so they have a lot of inventory that is hanging around, and it’s time to make deals. So I would encourage people to literally have the cash,

[07:29] like in an envelope, a bunch of hundred dollar bills and go in, learn your pricing, do your research, you know, check out what you want, go away, go back in and remove your emotion and totally be prepared to walk back out again and show them I would take 20% off and show them the amount of cash that you have in the envelope and say, I will trade you this envelope for that couch right now. Now, of course, if you’re going to do special order, you know, maybe it’s only 10% off, but it is a time to negotiate, to bargain, and you can do it in a win-win way. This is not a take advantage of them way. This is a helping them out way because you’re getting inventory off the floor that enables them to now go forward or you’re getting inventory out of their, you know, even if

[08:20] it’s special order, it’s still inventory because they have the couches built. They just don’t have them upholstered or whatever the case is. So this is a time to get money moving, which is the sixth principle of prosperity and such an important one. And it helps you and it helps them and it helps their employees and it helps the manufacturer of the couch and it helps the upholsterer of the couch and it helps the worker at the upholstery store and I could go on and on and on about all of the value and the benefit that is going to come to play because you got a good deal. Absolutely. I also love what you’re doing here is that you’re taking control of the situation and you’re taking control of your emotions. So you mentioned you go in the first time

[09:10] and if you talk to the salesperson and you tell them the price and you know you have the money, if they make the deal right then, hey, that’s great. If not, well, they’re probably going to see that one, you’re real, that you’re interested and they may call you back, but two, you separate it from your emotions. That’s so valuable to take that time to do that. It is. And I always recommend doing this in pairs. Tammy took a friend with her, uh, somebody else, you know, maybe a husband and wife go in because us human beings, it’s not always easy to separate from the emotion and you can go in with the intention of that and then all of a sudden your heart goes pitter-patter because you found the perfect

[09:48] eggplant couch or you know, whatever it is that you’re wanting, car, et cetera. Maybe not eggplant color for a car, but you get my point. So yes, bring a friend, bring a husband, wife, somebody. Well, I think for listeners, uh, one thing that’s helpful for you is, uh, one to get all the information to, to, you know, pull yourself away from the emotions. Um, three, as you go throughout this, um, you know, keep those, those principles of prosperity. I mean, realize that, um, what you’re doing, you know, your cash is important and you having control over that and really approaching this, uh, with the friend of help of someone else. I think it’s going to make quite a big difference in the way that you

[10:30] handle any situation. I love it. And so control that you brought up is the fifth principle of prosperity. And for our listeners, if you haven’t dug into those of late, they’re in just about every book that we have there in lots of different places on the website. And I encourage people to use them. The seven principles are obviously great for money, but they can be applied to health. They can be applied to your thinking. There’s all kinds of places where those seven principles of prosperity can be a really good reminder of what’s going on. And Spencer, you and I have been reading a book of late called tiny habits by BJ fog. And one of the things he says is if you can have a little tiny reminder of something,

[11:17] a habit that you want to do and thinking prosperously is a habit that we all want to have, then you are more likely to do that rather than trying to take on this big thing. So you as a listener might say, okay, I’m going to just start with one principle and that is think from a prosperous mindset. And every time I want to use the word as an example, a pandemic or some of the C words that are going with the current world that we’re in right now, you can tell I try to avoid the word. Sometimes I have to stop because I don’t want to use the word. I literally don’t even want it coming out of my mouth. So you might say every time that comes up, then I am going to do 10 pushups or I am going to think of three things that I’m grateful for, or I’m going to write a

[12:05] thank you note email to somebody or something. Yes, this is so good. I am loving this. I think it’s helping all of us and I’m going to stick in one more principle, which is multiply. And you can notice the principles of prosperity for money, but we just talked about the mindset and we talked about some habits. So I think you multiplied pretty well today. This is like an algebra lesson. How fun. Yes. Well, listeners, thank you for spending your time on the podcast with us. And we hope that it’s helping you live a more prosperous life. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.