0% doesn't always mean 0%

[kootch88]

I think it is about dealers getting the pricing options to the customer very early in the sales process. We used to price every item at 0%, then offer discounts. But some customers would walk because we were $1300-$2500 (more expensive tractors have higher buydowns) higher than the guy selling at cash price and they didn't listen carefully enough to hear the discount part of the sales pitch.

So about 2 years ago we made the decision to price at cash/standard rate with all discounts, then offer the better rates, all the way to 0%, at our cost to the customer. In reality, we all know that 0% isn't free, it is just absorbed in some manner and the cost is passed on to the customer. This seems like the most "honest" approach, although I use that word carefully as it is not dishonest to price everything with 0% packed in.

The best thing, although it takes the sales guy a little time, is to crunch the numbers for 0%, 4.25%, and standard rate and see what fits best.

Glad you got your tractor! Stay in touch.

Dave, many of us have never bought a tractor or at least financed one, like in my case. The only large ticket items most of us have bought are new cars and houses. When I buy a new car the price I pay is the same if I pay cash or finance, even when they have 0% options, which is what I got when I bought the FJ 2 years ago. Heck 10 years ago I bought a S-10 on my credit card and then financed it with my credit union because our rate was half what the dealers was at the time and I needed it right away, and they still gave the car to me for the negotiated price. So, to say the 0% is always paid for by the consumer is misleading in my opinion.

You are right though, if I had known the options right up front I would have had an effortless and happy buying experience. I really wish I had because I always try to buy local. I could have gone down the road and bought in N.H. and paid no sales tax, but I like to support the local guy, so I think you can see I wasn't trying to nickel and dime the dealer. I want him to make money too, that way I can always have a dealer and parts 5 miles from my house instead of 90.

 

[Dougw133]

Just an FYI on the Mahindra financing. I thought I was negotiating with the intent of taking advantage of the 0% for 5 years. After all was said and done, I learned I needed to write a check for that privilege. I ended up going with the regular financing with the intent of refinancing with my credit union at 2.99%, but I was rather angry with how the process worked. The owner knew I was ticked and threw in a weight box (JD) and painted it Mahindra red, but still, I could not find anywhere on the website where I would have to write a check for $1375.

I am glad the dealer helped me work through it after all, because I was about an inch away from going to a lesser Kubota on principle.

On a side note, my local dealer owes Davestractor a commission for saving the sale. He was great in providing quality information and making me realize the dealer was not gouging me, which is what I thought as I looked at the ceiling until 3:45 this morning.

Yep. I had the same intent and after working all the numbers together it was better for me to take the 5.85% and the 3000 cash back. All the manufacturers do the same thing. Offer 0% and then find you have to pay more for the tractor if you take the 0%.

 

[grsthegreat]

i just get real pissed off when a sales guy asks we how much im willing to pay per month when i asked the price on a truck, tractor,,etc. instead of telling me the price of the vehicle. they must think were all idiots.

if a sales dude tries that approach with me, i turn and walk out. i dont like to be played as a fool

 

[RickB]

As I have said on TBN before, the only way to compare the price on a tractor you are financing, is to compare the monthly payment for X number of months. I try to explain this as soon as the customer and I mention financing. And by the way, dealers having to buy 0% rates isn't just a Mahindra thing, it is just that Mahindra is being up front about it.

Not even just a tractor thing. Automotive 0% rates almost always carry a higher price. Nothing new or different here.

 

[LAWALLSTRACTOR]

Dave, many of us have never bought a tractor or at least financed one, like in my case. The only large ticket items most of us have bought are new cars and houses. When I buy a new car the price I pay is the same if I pay cash or finance, even when they have 0% options, which is what I got when I bought the FJ 2 years ago. Heck 10 years ago I bought a S-10 on my credit card and then financed it with my credit union because our rate was half what the dealers was at the time and I needed it right away, and they still gave the car to me for the negotiated price. So, to say the 0% is always paid for by the consumer is misleading in my opinion.

You are right though, if I had known the options right up front I would have had an effortless and happy buying experience. I really wish I had because I always try to buy local. I could have gone down the road and bought in N.H. and paid no sales tax, but I like to support the local guy, so I think you can see I wasn't trying to nickel and dime the dealer. I want him to make money too, that way I can always have a dealer and parts 5 miles from my house instead of 90.

Believe me, If you had decided to pay cash for that car, that dealer would have had a grin from ear to ear, because of the extra money he made on that deal because you chose the cash option. Some dealers work it that way and that is great if they are in an area that they can sell for the inflated price, and that is possible if all the dealers are doing it the same way. I hope you understand what I am saying.

 

[LAWALLSTRACTOR]

i just get real pissed off when a sales guy asks we how much im willing to pay per month when i asked the price on a truck, tractor,,etc. instead of telling me the price of the vehicle. they must think were all idiots.

if a sales dude tries that approach with me, i turn and walk out. i dont like to be played as a fool

There are an awful lot of them. I have many that come in and I try to be up front and explain it all to them. They then go to the competition, pay the higher price and get the 0% for it ,because they really didn't understand what I was trying to tell them.

 

[shortthrow50]

whoooddoodooowapdoowippoosss

 

[rockshaft]

I always make my best deal for the total price, then for these big ticket items like vehicles/tractors/boats, if the have a financing incentive going on that's what I use. If they said it would cost more to do so- I'd walk away. I understand financing costs more, but no one wants to get jerked around. The dealer should have been more clear from the start if there were caveats.
I personally have never understood the concept of buying based on monthly payment amount. Sure it's important to be able to afford a given payment schedule, but I want to negotiate full price.

 

[kootch88]

I talked to the previous manager of Wiscasset Ford and the 0% interest discussion. He said when they ran 0% it made no difference in the sale price of the vehicle and there was not a dealer cost similar to what I experienced with Mahindra. When I told him about what happened he said he would have told them to *($@#%$#^%&%&^%# off because that is B.S. He could not believe the dealer had to pay an extra cost for that type of financing.

I am not saying what Dave said was untrue, just that cash or financing, the price of a car is the same, at least with Ford. I finally found in the fine print where Mahindra said the 0% required an up front payment. He also said there were a lot of times when they had incentives to finance at 0% because the paper looked good on the books and strengthened their rating as a finance corporation.

 

[DavesTractor]

I talked to the previous manager of Wiscasset Ford and the 0% interest discussion. He said when they ran 0% it made no difference in the sale price of the vehicle and there was not a dealer cost similar to what I experienced with Mahindra. When I told him about what happened he said he would have told them to *($@#%$#^%&%&^%# off because that is B.S. He could not believe the dealer had to pay an extra cost for that type of financing.

I am not saying what Dave said was untrue, just that cash or financing, the price of a car is the same, at least with Ford. I finally found in the fine print where Mahindra said the 0% required an up front payment. He also said there were a lot of times when they had incentives to finance at 0% because the paper looked good on the books and strengthened their rating as a finance corporation.

We don't require a payment up front for 0%, we just price the tractor at the 0% price, which on a Max is $1375 over the 4.25% cost. So for example if a tractor package was $15,000 at 4.25%, it would be $400 less for cash or standard rate, and $1325 more for 0%. A customer can then pay for that $1325 over 60 months at 0% interest...which is kind of ironic if you think about it.

But lets do the math. $15K at 4.25% is $1677 in interest at 60 months. So buying the 0%, as long as you did not plan on paying it off early, saves you a little. $1677-$1325 = $352 savings.

It comes down to the "no free lunch" deal. If a dealer says you can have zero percent or pay cash and the price is the same, make no mistake, you are paying for the 0%, it's just that the cash guy in that instance is over paying.

I'm not sure how all automakers work, but don't they always offer a huge discount if you do not use the 0%? I think I saved maybe $5K back in 2006 when I bought a new Dodge pickup and paid cash instead of 0%.

In any event, the thing that is important is honesty. If 0% is more, then lets be right up front about it. If someone leads me down the path in some manner then surprises me at the last minute with fees, I'd walk.