Financing 3.99 vs 0%

[kiotiken]

I discussed this heavily with my dealer when I bought. I ended up going with 0% for 60 months on my 5035HST. I got a $1,000 rebate, applied to the price, a "Dealer days" $400 rebate and a $250 Military rebate (I got a check in the mail for those two as they could not be applied to the loan). I also took advantage of the "Power Package" deal and got a discount on a cutter and box blade, plus the dealer took off another 10% because I bought the tractor from him. I also got the rear tires filled with beet juice, with another discount as well.

I know all the discussions about 0% not being 0%, and it isn't, but cash price only gave a $2500 rebate. Going with the 0%, the only extra cost was a $560 "buy down" that was put into the loan. That's it. No other extra fees or costs above and beyond normal.

If I had chosen 3.99% for 72 months, the payment was only going to be like $22 a month less, but for 12 more months of payments.

I got out the door with a 5035HST, front bumper/guard, FEL, 7' HD cutter, 7' HD box blade and filled tires, after taxes and fees for $35,000 and some change at 0% interest for 60 months...and got $650 in rebate checks a month later. I put no money down at all.

Had I gone with 72 months at 3.99% I would have ended up paying closer to $40,000 in the end. I didn't even look at payment for 84 months.

I think this helps show a big part of the problem, terms are becoming longer and longer and people are more concerned about the monthly payment than the price. Cash is king, but when that's not possible, a sizable down payment with as short of a loan term as possible will save you big bucks every time. Borrowing money to buy EVERYTHING is a new concept and everybody (if you work that way or not) is paying the consequences.

 

[Ram4x4]

Yeah, I agree. Normally I do like to put a sizable chunk down and go as short as possible, but in this case I had other expenses to use money on and didn't want to drag the bank account down too low.

Yeah, the payment is as much as a car, but other than the tractor and my mortgage, I'm debt free, car and truck are paid for and zero balance on the credit cards, no other loans, so the payment isn't a big deal.

I did the 0% because the buy down amount wasn't much and it gets it paid off in 60 instead of 72 or 84 months. Actually, I'll get it paid off sooner than that, but this way I end up paying less overall when it's said and done.

 

[kiotiken]

Yeah, I agree. Normally I do like to put a sizable chunk down and go as short as possible, but in this case I had other expenses to use money on and didn't want to drag the bank account down too low.

Yeah, the payment is as much as a car, but other than the tractor and my mortgage, I'm debt free, car and truck are paid for and zero balance on the credit cards, no other loans, so the payment isn't a big deal.

I did the 0% because the buy down amount wasn't much and it gets it paid off in 60 instead of 72 or 84 months. Actually, I'll get it paid off sooner than that, but this way I end up paying less overall when it's said and done.

Please don't take what I said as a criticism of your choice. I think I'm just trying to make the point that the cheapest way to do anything is not to borrow money, even if it's @ "0%". Banks are incredibly good at getting your money and still putting a smile on your face and it's getting worse all the time.

I was in the local shopping mall years ago and they had one of those mini boat shows going on. Nowhere on there could you find the price of the boats, but they all had some ridiculously low monthly payment number. In very small print, it showed that the term was 180 months! That boat will be sunk before the last payment is made.

You also don't even hear the monthly price advertised anymore for cars, it's always a bi-monthly number. "Only $89 bi-monthly for this $60K truck". What a farce in my mind. These are misleading tactics that appeal to a generation that got no real formal financial education in school. Shooting fish in a barrel comes to mind.

 

[Ram4x4]

Please don't take what I said as a criticism of your choice. I think I'm just trying to make the point that the cheapest way to do anything is not to borrow money, even if it's @ "0%". Banks are incredibly good at getting your money and still putting a smile on your face and it's getting worse all the time.

I was in the local shopping mall years ago and they had one of those mini boat shows going on. Nowhere on there could you find the price of the boats, but they all had some ridiculously low monthly payment number. In very small print, it showed that the term was 180 months! That boat will be sunk before the last payment is made.

You also don't even hear the monthly price advertised anymore for cars, it's always a bi-monthly number. "Only $89 bi-monthly for this $60K truck". What a farce in my mind. These are misleading tactics that appeal to a generation that got no real formal financial education in school. Shooting fish in a barrel comes to mind.

Oh, I agree with you. It's getting ridiculous how long they are willing to finance stuff for. Pretty soon they'll allow you to finance it for life and pass on the payments to your kids!

I also agree to the sales tactics, the "Only $169 per month!" sounds good, but...then the fine print tells the ugly story. Actually, most of the car pricing I see advertised on TV now is for a lease, not a purchase. Sure, it's "only" $169 per month, after you put down a sizable chunk and they only give you some ridiculously low amount of mileage allowed. That's where they get you too because the allowed mileage is so low the majority of people exceed it and that costs a lot!

When I finance anything, the first thing I look at is how much am I paying total for it when it's done, try to get the lowest terms (dealers hate me because I make them work through all options so I can see the numbers) and THEN see I if the payment fits my budget.

I would love nothing more than to pay cash for everything, but that's not realistic for me.

Just went through a discussion with my 17 year old son on all this. He has his first job washing dishes and we got him his first car. We bought him a 2001 Subaru Forester for $5,000. Bank would only finance it for 2 years due to mileage and he's paying $228 a month for it (actually, I just paid cash for it and he is paying us monthly because interest rate for a loan for him would have been 17%!). He didn't understand why he couldn't get a new car because the payments were "only" $149 per month for what he was looking at. We sat down, went over all the numbers and he finally understood. Yeah, $149 per month, for 6 years and with $3300 downpayment (which he doesn't have). He wasn't thinking about insurance as well. He now understands that he is only n the hook for the car for 2 years, vs 6 and overall it isn't costing him a lot of money. He doesn't like it, but he understands it. I've been showing him the numbers and the why's on everything we buy. I understand his youth and the "I want, I want" mentality, but it is important he understands how to manage his money and live within is means AND to make sure what he's doing makes sense financially.

 

[deathtoblackberries]

Oh, I agree with you. It's getting ridiculous how long they are willing to finance stuff for. Pretty soon they'll allow you to finance it for life and pass on the payments to your kids!

I also agree to the sales tactics, the "Only $169 per month!" sounds good, but...then the fine print tells the ugly story. Actually, most of the car pricing I see advertised on TV now is for a lease, not a purchase. Sure, it's "only" $169 per month, after you put down a sizable chunk and they only give you some ridiculously low amount of mileage allowed. That's where they get you too because the allowed mileage is so low the majority of people exceed it and that costs a lot!

When I finance anything, the first thing I look at is how much am I paying total for it when it's done, try to get the lowest terms (dealers hate me because I make them work through all options so I can see the numbers) and THEN see I if the payment fits my budget.

I would love nothing more than to pay cash for everything, but that's not realistic for me.

Just went through a discussion with my 17 year old son on all this. He has his first job washing dishes and we got him his first car. We bought him a 2001 Subaru Forester for $5,000. Bank would only finance it for 2 years due to mileage and he's paying $228 a month for it (actually, I just paid cash for it and he is paying us monthly because interest rate for a loan for him would have been 17%!). He didn't understand why he couldn't get a new car because the payments were "only" $149 per month for what he was looking at. We sat down, went over all the numbers and he finally understood. Yeah, $149 per month, for 6 years and with $3300 downpayment (which he doesn't have). He wasn't thinking about insurance as well. He now understands that he is only n the hook for the car for 2 years, vs 6 and overall it isn't costing him a lot of money. He doesn't like it, but he understands it. I've been showing him the numbers and the why's on everything we buy. I understand his youth and the "I want, I want" mentality, but it is important he understands how to manage his money and live within is means AND to make sure what he's doing makes sense financially.

^^^ this, total cost of ownership, exactly.