0% was but is no longer truly 0%

[chriscos]

Loans amortize, right?

4% interest on 18k for 60 months is $1,889.84 in interest payments.

1.5% interest on 18k for 60 months is $694.68 in interest payments.

So JohnThomas, I think you are paying closer to 1.5%... I have no idea what your purchase price was, but lets say 18k. Still not 0%, but not 4% either

Having said that, when I signed the papers on my new 2920 the other day, I decided to finance the whole thing instead of putting some money down to reduce the payments, all thanks to you posting this topic. So thank you for helping reduce my interest rate :thumbsup:

 

[JOHNTHOMAS]

Loans amortize, right?

4% interest on 18k for 60 months is $1,889.84 in interest payments.

1.5% interest on 18k for 60 months is $694.68 in interest payments.

So JohnThomas, I think you are paying closer to 1.5%... I have no idea what your purchase price was, but lets say 18k. Still not 0%, but not 4% either

Having said that, when I signed the papers on my new 2920 the other day, I decided to finance the whole thing instead of putting some money down to reduce the payments, all thanks to you posting this topic. So thank you for helping reduce my interest rate :thumbsup:

Glad I could help.
The $18000 was a pretend number (not for the tractor I actually bought or the actual amount I paid) pulled out of the air and was picked specifically because it came out to an exact $300 a month payment. My payment is actually $150 a month plus $9 a month for 6% Ky sales tax. That should be easy to figure.
Attached a simple amortization site to determine true rate of interest or payments or different combinations.
Amortization Schedule Calculator -- Bankrate.com

 

[crazyal]

i got a WHOLE LOT more than $1000 off for mine when i paid cash. Today sales are slow and cash is king.

The CIR is not a dealer discount. It's a discount from Kubota if you don't finance through KCC. Maybe Messick can answer it better but I was told that you work out the price for the Kubota and then if you pay cash you get an additional amount off. If you come in and say you're paying cash the dealer probably just adds it in to the discount they are giving you so may not know you're getting it.

 

[rjkobbeman]

Right!!
That's the reason I posted this. Pointing out that there has been a change. It was a true 0% interest charge on a purchase to the customer previously but with the new cash discount that has changed. It was a true 0% before because there was no discount for cash. Cash buyers were subsidizing us credit buyers. Us credit buyers were paying the same price as the cash buyers but our payment was spread out in equal monthly payments with no additional amount added for interest. It was interest free before as far as actual cost to an individual buyer of a specific Kubota with payments spread over a number of months.
This is not a philosophy statement, it's an accounting statement.
$18000 cash or 60 payments monthly of $300 for a specific Kubota tractor.
To say someone is paying it in higher costs or some way isn't relative to the statement of 0% interest.
Again, the true 0% is now gone with the cash discount being offered.

I don't believe either of us were rebutting anything you said. Realize that people post and contribute to the whole conversation... not just responding to the original poster only.

 

[JOHNTHOMAS]

I don't believe either of us were rebutting anything you said. Realize that people post and contribute to the whole conversation... not just responding to the original poster only.

I was agreeing with you. You got the point of what I was saying. I reposted my original post and your post to show our agreement.:thumbsup:

 

[grsthegreat]

again, all i know is i first negotiated the best deal i could find for my tractor, then was offered an additional $2,500 off for an all cash purchase.

cant beat that.

 

[johnrex62]

There is no true answer that applies to everyone's situation. Case in point, when I bought mine last July there was supposedly a $1000 discount for a cash sale rather than use the Zero Down Zero Percent financing.

I negotiated a price before we started talking financing terms. My price was well below list and included implements from sources other than Kubota. My price was the same cash or financed. If the dealer built in some padding for the financing, he would have made more if I paid cash. By that logic, I made a better deal by financing since I added another product to my package (financing) at no additional cost to me.

 

[MessickFarmEqu]

The CIR is not a dealer discount. It's a discount from Kubota if you don't finance through KCC. Maybe Messick can answer

Thats correct.

The financing does not cost us anything unless your buying down a rate or extendeding terms beyond the official program. Dealer partisipation is very common with other companies, but usually Kubota does not do it.

 

[vjd57]

I could have saved $1,000 if I paid cash on my L45, thats works out to less than 1% interest on the loan. This was a no brainer for me, use their money and collect interest on mine plus have plenty of cash on hand for piece of mind.:thumbsup:

 

[art]

There never has been free money on automobile or tractor purchases. The only free money is money the Banks borrow from the Federal Reserve to make high interest consumer loans with. The cost of an automobile or tractor is increased by the respective manufacture to include an actuarial loan default amount, a good interest return on money plus a projected annual corporation income growth rate. Most corporations set this at 6%. They then find a Bank or Finance Company to handle the paper work and provide the loan. The Corporation agrees to 釘uy Back or 典ake Back all defaults. Now we are ready to sell our $8,000 dollar tractor. So we increase the price too $14,000. The $14,000 dollar price will provide 0% percent financing for five (5) years; factor in a projected six (6) percent annual growth rate, an interest rate of 5-6% on the loan amount and defray out of pocket cost for all the 釘uy Backs or 典ake Backs because of loan defaults and provide a hefty profit percentage at time of sale. So the cost of the $8,000 dollar tractor has now increased to $14,000, a 75% increase in cost so the tractor can be sold at 0% for X number of years. Good Golly what a deal, where do I sign? I have just got to have one, come on break out the paper work.

Dealers with a high number of 典ake Backs or 釘uy Backs are being dropped in record numbers by manufactures. The 釘uy Backs or 典ake Backs due to loan defaults are having a negative impact on the manufactures bottom line profit projections and cannot be tolerated I don稚 care how long the dealer has been in business. The high number of 釘uy Back or 典ake Back is also resulting in annual double digit price increases. The consumer will only swallow so many times the story about price increases are because of an increase in steel, rubber or plastic prices and manufactures know this.

Our job and financial economy was strong before we started having alleged 0% percent sales. Look at it now it is somewhere south of the deepest hole.

A lot of consumers have started objecting to having to pay an elevated price for a product so a Manufacture or Dealer can offer 0% percent sales. This is reducing the number of Dealers even more, and at the same time increasing unit prices and repair parts prices. A part that cost $5.00 five years ago today costs $10.00. Look at all the money we are saving by purchasing items at 0%.

So before we make a 0% purchase we need to explore other alternatives to paying besides obtaining a 0% percent loan.

Not really a problem as you have put it. The "take backs" as you call them we call them recoarse and dealers have a choice. We perfer what they call non-recorse as we are not responsible if someone in the credit department is sleeping but the finance company is!

That part has nothing to do with the rates as they are the same, just some people will not be approved if questionable credit!