Tag Archives | mba
After graduating with a MBA, I started to look into refinancing my student loans. My financial situation wasn’t terrible, but not amazing either. Over $100K in loans, little cash on hand, and close to 7% (fixed) interest rate from FedLoan Servicing. (Note: links to SoFi and CommonBond include my referral code – if you find this post useful, I appreciate the click. As I remember, each services gives a referral bonuses to you – $100 to $200 – and to me)
Here’s what I did to narrow the gap down to 3.5% (fixed) over 5 years. Note, some of the later steps will likely apply only to those with a good credit score of 725+, US nationality, and a reasonable track record of credit history:
- Research Providers: I started the process by searching Google, but also looking at Reddit, Credible, and Student Loan Hero.
- Get Baseline Estimates: I looked through a list of services that offered refinancing, looking for the top filter of lowest rates (both fixed and variable), using Credible to get early estimates on what I might get offered.
- Set a Goal: I preferred fixed if I could get it low enough (4% was my target based on what services were offering “as low as” for rates and what I felt my credit history justified)
- Short-List Your Applications: I decided to focus on Earnest, SoFi, and CommonBond for my actual applications.
- Look for Ways to Improve Your Credit: My initial offer from SoFi was 4.5%. This was a bit depressing. I asked SoFi if there was anything I could add to help make the case for a better rate. I also looked at Credit Karma to see if there was anything significant affecting my credit score. It turns out, there was, and I was able to make a quick fix on it.
- Work with Companies to See How You Can Help Them Make a Better Decision: I don’t know if that fix helped with the financing companies, but a week later, my credit score went up by 40 points.
- Use Competing Offers to Negotiate Among Providers: Around this time, offers from the two other companies came in, one of which was pleasantly lower than SoFi. I then used that offer with the other companies, and asked if they could offer a better rate. After a few iterations of this easy (for me) negotiation, I ended up with a final rate of 3.5%, lower than I had hoped. I chose CommonBond.
- Complete the Paperwork: After the paperwork was completed, the loan was refinanced in a little over a week. The entire process from initial contact to disbursement took about six weeks.
- Be Happy!
- Handle Your Monthly Payments
Overall, I was happy dealing with all 3 companies, no issues in my interactions. In addition, do keep in mind that federal (government) loans have special provisions for debt forgiveness that you will not have when you go private.
However, I plan (and want) to pay off my loans in full, and many private loans providers are good about understanding and working with you if you ever do lose your job and must delay payments for a little time. Firms like SoFi even help you find a new job if you find yourself out of work.
So you’ve earned your MBA and now it’s time to start working. Especially if you’re an international MBA, you probably don’t have a car and want to get good value for your dollar. After all, you need to look good, but you have to pay off your student loans too.
That’s what I’m here for: I’ll show you how to buy a certified pre-owned car and get the most bang for your buck.
Why Certified Pre-Owned (CPO)?
Manufacturer CPO vehicles are fairly new (within last 3-4 years) and in very good condition. Manufacturers will add additional warranty on top of what a car may currently have, and because of this, they are incentivized to carefully inspect a car before they certify it in order to end up profiting from the extra fee the customer is charged for this peace of mind. For you the customer, you want peace of mind because you’re going to be working so many hours in your new job, you don’t have time to be worrying if your car is going die out on you as you are stuck in rush hour traffic. Thus, unless you consider yourself a car expert who feels he can rate the internals of a car himself, CPO is a great way to go.
Sound good? Let’s get started.
For more about CPO programs and understanding which manufacturers offer good ones, see this article from Edmunds.
- Start with CarGurus. CarGurus can tell you how good the price of a car is relative to the area and similar vehicles. It’s a very good starting point for understanding whether something is a good deal. The only thing where it may lead you astray is if the listing on CarGurus is different from the official dealer listing – for example, CarGurus thinks there are a couple of options that are not in fact, in the car. Just double check. Also double check that the car is in fact manufacturer CPO – dealer listing is the official listing. A used BMW car cannot be sold by a Mazda dealer as CPO. It may be CPO by the individual dealer, but you only want manufacturer-CPO. A BMW manufacturer CPO means that warranty is covered by BMW as a whole and you can go to any BMW dealer for repairs.
- Here’s an example search I made for a friend who was looking for Mazda and Subaru crossovers. Here’s a starting link for you to enter in your own information. Remember to select “Dealer” as Seller Type and “Certified” under Condition. All cars that are filtered should be manufacturer-CPO.
- Before you begin, filter out (check the box) all the options under Photos in the left column. You do not want to see listings with frame damage or simply don’t have a photo.
- You want to focus on the Good and Great Deals. I pay attention to anything $1,500 below Market Value. Depending on urgency and how picky you are in terms of options, you may have to be more amenable to lesser deals.
- If you like what the car offers, call the dealer and book a time (ASAP) to see the car. Research the car in advance just so you know what you’re getting in terms of reliability, CPO terms, etc. A test drive really isn’t about seeing if you like the car – it’s pretty hard to judge a car on a 5 mile drive that you will probably drive conservatively. If you see a car you love and it’s a Great Deal, don’t waste time and put it off until a convenient time (weekend, holiday). Odds are it will sell quickly. There’s less dealer foot traffic in the middle of a week, so there’s an advantage.
- For the most part, don’t expect to really negotiate unless you have leverage (exact same car within 50 miles, similar miles and options). Most dealers now are on automated pricing in which they have enough inventory in enough areas to understand what they can sell at. The system regulates the pricing.
- If the car is listed as a Great Deal, it may already be under dealer cost, so no discount possible – also look up a car under NADAguides to better understand the value of a car. Another thing to look into is the Costco Auto Program. The program guarantees you an easy no-negotiation price for a new or used car. Costco will have partnerships with dealers in your local area. You may not get the absolute best price from Costco, but you will always get a very good price with no work or hassle – Costco is very emphatic about protecting its members from typical dealer BS.
- Do check out any student offers (usually a cash rebate from the car manufacturer, not the dealer – it does not affect dealer profits) for new graduates. This may be around $500-$750. You can see a rundown of discounts per manufacturer on CarsDirect.
- You’ll need insurance, a copy of your job offer (or pay stubs), and a copy of your MBA degree to finalize the purchase assuming you want financing and the student discount. For F1 Visa MBAs, some car financing units may to offer financing to F1 Visas – check in advance. Toyota does, BMW does not.
- You’re more than likely better off not buying any additional insurance / wheels / maintenance coverage. Those are always priced to be profitable (of course). You could negotiate it (there may be tips online) if you want to see how low they can go. Expect the car purchase to take 5 hours if everything goes smoothly – most of that is due to financing.
If you’re wondering, I followed these guidelines myself and purchased a 2013 BMW (F30) 328i sedan for $21,500 in the Spring.
- Original MSRP: $42,000
- Purchased with 25,000 miles, and with CPO Warranty, the car had warranty for nearly 3 more years or 75,000 miles at time of purchase. Free maintenance was active for an additional 10 months. For reference, a new BMW has a 4 year / 50,000 mile warranty.
- $1,500 recent student graduate manufacturer rebate from BMW for CPO vehicles.
- Price was listed at $22.9K. Before the student rebate, the car was shown as over $3,000 below market value, according to CarGurus.
- Received 2% financing for 5 years, another BMW promotion.
- No Costco discount – the salesman said, this is already below our dealer cost.
- NADAguides listed the CPO pricing for a similar (mileage, condition, etc.) vehicle at $27,075, with the “Clean Trade-In” value, or what a dealer would pay if a customer traded in the car to buy another at, at $22,375. This latter value doesn’t include the cost for the dealer to actually inspect the vehicle, recondition any problem issues (for ex, my floor mats were replaced with new ones), and add warranty onto it.
As a former Northwestern Kellogg MMM (MBA + Masters in Design Innovation), I’ll tell you something that you want to know but that no one at Kellogg will ever tell you:
Secret Pro Tip:
If you’re an international student who REALLY wants to work (and / stay) in the United States (USA) after graduation, invest in the MMM program.
- As an international MBA student in the US, you will be on a F-1 Student Visa for full-time students (if you are an exchange student, you will be on J-1). You are allowed to work up to 1 year in the USA on OPT period (Optional Practical Training), given that you find a job no later than 3 months after graduation.
- In the unfortunate situation you have not found a job three months after graduation, you must leave the United States.
- If you find a job with a company that is willing to sponsor your H1B Visa, you enter a one-time lottery for the H1B Visa. The probability of winning this year (2016) was just 40% for those holding a Master’s degree from the US. The odds were lower if you only held a Bachelor’s degree. Generally, this percentage becomes lower with each passing year due to increases in demand (from people like you who are reading this).
- If you lose the lottery (odds are you will), you go back home.
- Now, with MMM, the M.S. in Design Innovation is an engineering degree (that does NOT require an engineering background) from the McCormick School of Engineering at Northwestern. This engineering degree allows you to stay in the US an extra two years (3 total) and participate in the lottery a total of 3 times.
It can be said that the MS DI program is not really an engineering program, in the way that most people think about engineering (hardcore math & science). Nonetheless, it’s classified as an engineering program.
Beyond that are the more traditional reasons to be part of Kellogg: long-time elite business school brand, the amazing new all-glass lakefront building, rise in the rankings, leading percentages for diversity in gender and internationality, continued emphasis on tech, and my articles on the experience). Plus the MS in Design Innovation offers a great core of classes that will help you understand problems from bottom up (“what is the user/customer thinking?), rather than just top-down (“well, it’s clear from the financials, we have too many employees, let’s just fire them”).
All that sounds sound great, but let’s be real. The reason you go to business school is to fulfill your professional goals. If your goal is to be in the United States long term, apply for Kellogg MMM.
The simple math: at today’s acceptance rates, you have a 60% chance of getting rejected and having to leave the country after one year. With MMM, you can stay at least three years and the chances you will end up having to leave the US without a Visa is only 21.6%.
Is this worth an extra quarter of tuition? Of course it is.
At Kellogg, we learned that people in aggregate tend to be quite correct (for example, say you have a random amount of jelly beans inside a big jar. Ask people to guess the amount of beans. When you average all the guesses, it will come out quite close to the real number, even if the real number is large and random, like 1,724).
According to How Microsoft got so good at predicting who will win NFL games, Microsoft Bing is an awesome prediction guru of human intelligence, machine learning, and big data:
Bing Predicts is run by a team of about a half dozen people out of Microsoft’s Redmond, Washington headquarters. It uses machine learning and analyses big data on the web to predict the outcomes of reality TV shows, elections, sporting events, and more.
In 2014, Bing was 67% accurate predicting NFL winners.
In all, the Bing Predicts model considers hundreds of these different signals, or data points, for each event, like an election or game, Sun said.
So far this year[2015 to game three], Bing is about 60% accurate in predicting NFL matchups.
Sounds great, right? However, my first thought was, who cares about winners? I can’t bet on winners, this is why the spread exists, to create (theoretical) 50/50 bets that bookies can make stable revenue from.
My next question is, in this awesome model built from millions of dollars in labor and computing power, are the prediction results better, hopefully at a statistically significant (p = .05) level, than information I could get free from a public resource? How little can I spend to get reasonably close results to aid in my for-profit wagering?
Let’s look at Las Vegas betting spreads.
From 1989 to 2013, Las Vegas favorites were correct 66.8% of the time. With a sample size of 15 years, and looking at the chart above, I can say that Vegas is pretty good.
1 signal – Vegas odds – versus hundreds of signals – Microsoft Bing = the same result.
Great work, Microsoft.