Financing Buying advice 0% vs save $700 on BX

[DAT]

Looking for incite/opinions/recommendations/ +/- of either financing with Kubota's 0% vs saving the $700 and just buying outright?

Real close to pulling the trigger on a new BX25. Thought I had my mind made up, then the 0% option was presented.

Thanks ahead of time!! I'm new to this site and I must say it is addicting. Lots of good stuff.

 

[TripleR]

I prefer to pay cash when I can, but others prefer the other route.

 

[smstonypoint]

Here's a thread that provides a primer on the economics of taking 0% financing versus a rebate: http://www.tractorbynet.com/forums/.../192605-cash-purchase-versus-0-financing.html

Steve

 

[Bota Bum]

Kubota 0% requires you buy Kubota insurance for the life of the loan, adds up to around $700 for 4 years. But, it's a great policy, especially if your a 1st time user. Accidents happen and the insurance covers most anything.

I paid cash, but took the insurance anyway for the first year. And I think I will renew for this upcoming year 2.

 

[johnrex62]

You can do the math to come to a precise answer, but it boils down to this.

1. Do you have cash or have to borrow?

If you have cash on hand, then the discount represents $700 in interest earning over 4 years. If you can do better by investing the cash, then take the free financing. If not, then the cash discount is your earnings.

If you have to borrow, then the cash discount is not an option unless you can borrow elsewhere and pay less than $700 in interest on the loan over the 4 year term. Your earnings then would be the gap between the $700 rebate and your loan interest charges. If you pay more than $700 in interest on the loan you lost money and qualify to be a farmer. :thumbsup:

If you have to borrow and the bank will charge you more than $700 in interest, then the 0% financing will earn you the equivelent of the interest you would have paid to the bank.

 

[CAgnoli]

In my mind, with the way our government is devaluing our currency, I'd go with the zero percent and pay it back with inflated dollars.....use the cash you have on hand to pay off a higher interest loan....

 

[cougar21300]

Just in case you are unaware of it, Kubota extended their 0.0% terms this week from 48 months to 60 months. The CIR remains unchanged at $700.

 

[CinderSchnauzer]

You can do all the financial analysis and come up with the text book answer as to which is better. Unless you have a good investment, with current rates of return and possible taxes on any earnings it may come out that paying cash is best.

However, if you actually have the cash and could afford the payments, consider loaning yourself the money.

In other words, pay cash and then save an amount equal to what the payment would have been over the term of the loan. Since you are paying yourself this approach does require a bit more self discipline than paying the finance company.

Food for thought.

 

[crazyal]

One thing nobody can answer for you is how you feel about payments. For me I like the idea of owning outright.

 

[JOHNTHOMAS]

I've bought 13 Kubotas using their 0%. Some of them had no cash incentive and some did. I've always financed them and always let them take the payment out of my checking account so I have no concern for the "bother" of making that dastardly monthly payment myself some where and some way as some seem consumed by that requirement.
The BX25 should be around $16000 to $16800 so the interest rate on that amount of money for 60 months figures out to be about 1.75% ($700). If you are debt free and can't earn over 1.75% on your money then pay cash. If you can earn over 1.75% then take the loan.
If you owe for anything else that you are paying interest on then take the loan and pay off the other debt(s).
If your wanting the best advantage out of the Kubota 0% Interest then finance the entire amount, don't pay anything down.
Now this is all from being a former Auditor but now being a Counselor you may have to look at the pressures of debt, those are psychological and only you and your therapist can say what is the right answer.
Amortization Schedule Calculator -- Bankrate.com