promotional rates

[bp fick]

The Fed rate right now is what? A quarter percent?

Sure, there CAN be zero percent. The question is whether there is truly zero tractor loans being offered. If there is a "charge", something akin to a few hundred dollars, then that is a straight out, old fashioned buy down, or pre-pay program. Easy enough to compute as 3-5% interest, or there about.

To move hardware in the midst of a global recession of this magnitude, zero or near zero interest rates are precisely what it takes. Who in the world would pay yesterday's interest rates of 9% or some such? And, who could move hardware at 9%? Nobody. Welcome to the current age where 3% is considered a good return.

 

[kbotaman]

You must buy tractors (and other things) different than we do down south. We negotiate the price. We then figure out how it will be paid for. It is completely unacceptable for someone to try to change the price after it was agreed upon because they decided to finance for 60 instead of 42 months. It almost seems unacceptable. If it is discussed up front, that is fine, but that is not the custom down here. They do generally ask if you are financing or paying cash but that is completely different that what was stated above.

If the equipment was costing the dealer the same amount requardless of the finance terms I would agree with you, but when the manufacturer charges the dealer more because of the difference in the length of the finance term, the dealer is forced to a pass the increase along.

I always tell my customers up front when pricing the equipment of any variations that would effect the selling price. I don't like it, but I didn't write the sales programs.

 

[robertwhite]

If the equipment was costing the dealer the same amount requardless of the finance terms I would agree with you, but when the manufacturer charges the dealer more because of the difference in the length of the finance term, the dealer is forced to a pass the increase along.

I always tell my customers up front when pricing the equipment of any variations that would effect the selling price. I don't like it, but I didn't write the sales programs.

And that in a nutshell is how a dealer should conduct business.

I will be purchasing very soon and find the way Kubota conducts the 0% deals appalling to say the least.

I will conduct my negotiations the same as I would (and have done) on a car. Simple question to the salesman: What is the bottom line price for a cash deal? Even if I decide to explore financing, the question will be the same. Only after the price is agreed upon will I ask about financing. If the dealer balks, so be it. If the dealer gives me a line about 2 different prices, I walk. If the dealer explains himself as kbotaman has done and wants me to pay the $400+/- buy down fee, no problem.

Just as with cars, a buyer understands a tractor dealer needs to make a profit. The tractor dealer needs to understand the customer wants to spend as little as possible while still being fair. If customer and dealer can get on the same page, dealer will get the sale. If not, the customer will most likely (and should) shop elsewhere.

What make a somewhat unscrupulous dealer even worse is when his manufacturer plays games too. A two-fer against the customer.

Consumers are wise to most games these days, especially in this economic downturn. The sooner dealers and Mfgs. realize this, the longer they will keep their doors open.

 

[Axe Man]

I've been pricing tractors only for a few weeks as of now, but when talking to any dealer on a lot their question is always " will that be cash or do you require financing?" . Cash prices are always way lower than the 0% financing price. I dont have a problem with the higher financing price but it shouldn't be advertised as 0% when there is a premium to be paid.

 

[JOHNTHOMAS]

I've been pricing tractors only for a few weeks as of now, but when talking to any dealer on a lot their question is always " will that be cash or do you require financing?" . Cash prices are always way lower than the 0% financing price. I dont have a problem with the higher financing price but it shouldn't be advertised as 0% when there is a premium to be paid.

As many here can attest to, this just isn't true. Several have asked for the best price cash and best price financed and it has been the same price many times. I've bought alot of cars and this was the common question and many times I got lower cash prices but some times I didn't and finally figured out (was told) the Car Dealers got part of the financing money so they got more money for a car that was financed than one that was sold for cash, some times. Tractor dealers are different but my understanding is Kubota owns the tractors. The dealer makes a certain amount per sale over the price Kubota is selling them (dealer) the tractor and the dealer can determine his sale price to determine how much profit he/she makes. Kubota offers the financing as an incentive to help dealers sell more product rather than lower prices which is a slippery slope for any company to start. Now I agree nothing is free. The cost of financing is built into the sale price of every tractor sold and every buyer pays for that cost. Cash buyer or financing buyer. Everyone pays whether the benefit is used or not. Buy a hamburger with nothing on it at a fast food restaurant or load it down. Everyone is paying for the tomatoe, pickle, lettuce and special sauce (mayonaise) whether they take it or not. Bottom line, a dealer can sell the tractor for whatever they want but they still pay Kubota their fixed price. Now if a dealer has $300 to $400 profit that he's hoping to make (along with his has to have $1000/$2000/$3000) but is willing to not make to make a deal and sees the "catch" to make the deal and I'm sure all do, they will use that "catch" to make the deal. "How much cash over financing?" and that's the "catch" to make the deal then here comes the lower price for cash. Will you load the tires for that amount? Will you do free first service for that amount? Will you throw in a boxblade for that amount? Dealers know you are going to ask those questions and they are ready for you. If you don't then they just made a couple hundred extra to give to the next guy/gal to make their deal. Finally, how much less for cash over financing? Think about it. A few hundred dollars less, not thousands or even a thousand. Now go to an amortazation chart and figure out the real cost to finance $15000/$20000/$30000 for 42 months and you'll see it's much more than $300 to $500 that you may be offered for paying cash, it's the "catch" guys/gals.

 

[Axe Man]

John: My statement " cash pices are always lower " was made as related to my own limited experience in gatheing info and pricing. I didn't mean it as a blanket statement covering all dealers in all areas. Sorry for any misunderstanding.

 

[crbr]

......... Kubota offers the financing as an incentive to help dealers sell more product rather than lower prices which is a slippery slope for any company to start. Now I agree nothing is free. The cost of financing is built into the sale price of every tractor sold and every buyer pays for that cost. Cash buyer or financing buyer. Everyone pays whether the benefit is used or not. .......

Correct, thus zero % financing as you point out. Kubota wants business and they do it well.

 

[crbr]

John: My statement " cash pices are always lower " was made as related to my own limited experience in gatheing info and pricing. I didn't mean it as a blanket statement covering all dealers in all areas. Sorry for any misunderstanding.

I see your point.


My opinion on this is that (with cash or check) it's easier (for the seller) to redistribute the monetary representation of the transaction without to having to do it on paper (financing).

All I really care about is my machine saving me manual labor....

 

[MessickFarmEqu]

when the manufacturer charges the dealer more because of the difference in the length of the finance term, the dealer is forced to a pass the increase along.

just some input from a dealer. We do not pay into the cost of financing on all deals. For Kubota, its very rare that we do. CNH does on occasion. Cash prices are not always lower. It just depends on if a cash discunt is being offered. Often it is actually better to finance because the cash discount is less than value of the financing package. You gotta look at each deal on a case by case basis.