Friday, January 23, 2009
You may be thinking of getting a payday loan so you can run out and take advantage of Circuit City’s going out of business sales, but you might want to think twice. If you’re like me, you assume that because these firms are trying to get rid of all their merchandise the prices will be as low as they can go.
Makes sense, right? If the companies are just going to close up shop, they’ll take whatever they can get for their leftover merchandise. But there is more to it than that. Big chains, including Circuit City, Linens ‘N Things and Whitehall Jewelers, don’t handle the process themselves.
Liquidation firms
Big chains usually hire a liquidation firm to handle the going-out-business process for them. The liquidation firms buys up the remaining merchandise from the retailer. So by the time the consumers walk under that “GOING OUT OF BUSINESS!” banner, all of the products have already been sold.
The liquidator promises to pay off all of the company’s creditors, and any additional profit they keep for themselves. In cases like Circuit City’s, where the business filed for bankruptcy before finally deciding to close the business, the liquidation firm needs to make a significant amount of money in order to profit from the deal.
Getting their money’s worth
Liquidation firms do start the sales off with discounts, but often you’ll see discounts of just 10 or 15 percent at first. You might say “a sale is a sale,” and think that you have to be hasty to get the good stuff before it’s gone. However, sometimes liquidators discount the manufacturer’s prices instead of the store prices. Often the prices manufacturers set are higher than the retail store’s prices.
As a result, it’s possible for customers to end up paying more for an item than they would have paid before the liquidation firm took over. As one would expect, the firms will wait to slash prices to their lowest until the last possible minute. So instead of rushing out to get a payday loan so you can buy “the good stuff” as soon as the sale begins, you might want to wait a few weeks until the real savings begin.
Liquidators also have been known to bring in outside merchandise to offer at the going-out-of-business sale. Any money they make on merchandise they didn’t have to pay the retailer for is just extra cash for the liquidator.
Where the real savings are
The best prices on merchandise can be found at the retail store before the merchandise is turned over to a liquidator. Prices are usually at their lowest the week before the going-out-of-business sale begins, when the company is trying to sell merchandise while they can still profit from it instead of selling it to the liquidator.
So if you hear that a retailer will be going out of business, that would be the right time to grab a payday loan while the getting is good.
Source: Personalmoneystore.com
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