We’ve all been there. We walk into a bank to apply for a loan, such as a home or car loan. We barely walk in the door and the greeter says with a friendly smile, “How may I help you?” After we share why we’re there, the greeter says, “Let me get someone to help you.” After a few minutes and enough time to make you think the person you’ll meet is somewhat important, the banker comes around the corner, introduces themselves and says, “I hear you need help with a loan. I can assist.” We walk into their office where they offer coffee and donuts and we start discussing needs, loans, terms and conditions. Throughout the process the banker is friendlier than our best friend. Once we sign the loan agreement and receive the follow up information in the mail, the relationship seems to change. What happened?
This is the same experience as when we walk onto campus for the first time as a new college student or are walking between flights at an airport and the friendliest person we’ve ever met calls out and offers us a free gift, such as a t-shirt or 25,000 miles, for filling out a credit card application. The sales person laughs and jokes with us. They answer our questions and help us fill out the application. It’s so cordial and friendly and fun. We want to invite them for Thanksgiving dinner. Then we get the credit card in the mail and use it. Then we build up a balance because things were tight or we weren’t being money conscious. We miss a payment and receive a late payment fee. Our interest rate skyrockets to 25%. Ouch!
All of a sudden our good friends at the bank have a change of heart. Things are different now. They’re so business-like, so formal. What happened to those friendly folks we once knew?
What’s happened is that they’re showing their true intent. They’re business people in business to make money. We were the ones who confused a business relationship with a friendship. Sales are easier for business people if they’re friendly with prospective clients.
Sales people are in the business of selling.
Sales is an honorable, challenging and rewarding profession. We’ve done it and know. It’s incumbent upon the customer to understand, however, that sales people are in the business of making money. They make money by selling us something. Whether it’s a fridge at Sears, a used car at our local dealership, a new credit card sponsored by our favorite airline or a new home loan with our local credit union, it’s up to us, the consumer, to understand the true foundation of our relationship with person selling to us.
We should approach this relationship as a blind date, cautiously optimistic. More than likely the person who is selling to us is nice, intelligent and truly wants to help us. No doubt they believe in the product they’re selling. That’s likely why they’re there and, for most people, selling something they don’t have faith in is hard. That being said, they have a financial incentive for selling to us. They need to generate a pay check, just like us. We need to understand this, hear what they have to say, read what they provide us to read and research the facts.
Businesses are in the business of making money.
The company or business that a sales person is representing is in business to make money. This helps them stay in business and pay their sales person, along with their other employees. They need to make enough money to cover their cost of doing business, plus extra so they can grow. They make this money by charging more than a product or service is worth. This is called a premium.
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This is why credit cards charge interest on credit card debts we carry from month to month. They’re making a profit on loaning us money. When we miss a credit card payment, we represent ourselves as a credit risk and they charge a higher premium for continuing a relationship with a “risky” borrower.
There’s nothing wrong with this. It’s business. We, however, need to understand this and be cautious about the business relationships in which we enter. We need to determine if the agreement or relationship in which we enter is in our best interest.
Consumers Need to Be Conscious Consumers
We talk a lot about being money conscious. When we’re not money conscious, we will make mindless decisions that negatively impact us. We acquired $51,000 worth of credit card debt because we didn’t consider how living beyond our means would financially strap us. We were being unconscious about money and that’s why we were two financial professionals living in a basement apartment in our mid-thirties.
Being money conscious requires us to read the fine print. It requires us to be diligent and do our own research. The internet puts this power in our hands like never before in history. Not only does it make research easier, it makes it broader. We can research blogs and professional publications. We can participate in chat rooms and review article comments. Of course, don’t discount the power of asking your friends, family and confidants for their insight.
Before applying for a loan, we should research available rates. We should learn what will negatively impact rates and how that impacts us. We should understand the direction experts believe rates will go during the period we’ll be in the market for a loan. After having a general understanding, we should research several banks to determine which is best for us. We can thoroughly vet each bank before ever speaking to a sales person. This is powerful.
When we’re in the market for a car, we should research what we want, including the type of car, color, mileage, year and anything else that’s important to us. We should know what we can spend, understand rates and terms and know what’s available. We should lock in the best rate we can with a bank we trust before stepping foot onto a car dealership’s lot.
Before applying for a credit card, we should understand the terms and conditions and know what’s expected of us in order to avoid additional fees and expenses. We should know if we can live within the parameters set by the bank. We should make sure we’re comfortable with that bank and how they treat their customers.
This is being money conscious. Knowing what we’re getting into and with whom we’re dealing reduces the chance of someone or something taking advantage of us. It’ll help ensure that we won’t experience surprises and, if we do, what recourse we have to protect ourselves.
Friendliness Is Invaluable
Just as it’s easier for a friendly sales person to sell something, we’re treated better when we’re friendly consumers. Our advice is to be money-conscious consumers. We aren’t advising that anyone be mean or overly aggressive. Sales person are human and deserves respect. Businesses prefer making accommodations to friendly and appreciative customers. It’s typically easier to get the best deal by politely asking for it than to demand it. The contrary only happens on TV.
Business is business and that’s good for all of us. Be a bit business savvy and friendly and you’ll appreciate your business relationships more without any of those unexpected surprises.