Not trying to rain on the parade but does anyone remember the automobile industry disaster a few years back? I do. No one would buy a used car because new cars were cheaper at 0% and big rebates. Problem is 3,4,5 years later when you want to trade out of that car (since you got such a great deal) and you can't because the market adjusted to the rebates knowing the "true" value of the equipment is really MSRP minus rebate. Rebates sound like a good deal but most of the time the rebate lowers your resale value. Rarely will you buy a $5,000 tractor for $2,500 because the manufacturer is nice. Usually, you are buying a $2,500 tractor they couldn't sell and willing to just move the inventory and make money on the trades. As long as you plan on keeping it for a long time, it probably isn't that bad of a deal. But, if you want to sell it anytime soon you will probably realize how much less the equipment is worth because of the rebate being offered at the time you bought it. sorry... just saying.
Price Check John Deere unbelievable trade-in offer
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Diamondpilot
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The dealer knew he had you. You should have seen a different dealer. Wanting to trade in that soon he figured he would get you more thank likely to settle on the deal since he seen it as you bought the wrong machine and wanted to upgrade so quickly.
Lot of it has to do with who you deal with and being at the right place at the right time.
My family has been in the car business for 60 years. My grandfather and his brother owned a Chrysler dealership. My uncle has ran 2 different Ford dealerships, and all have sold RV's, trailers, and marine equipment also. I know how the game works. They are not going to let anything leave the lot without making something. It does not matter where it comes from. May be hold backs, dealer incentives, rebates, ect.
Back to the OP. He got a fair deal. Not the best deal in the world but a fair deal. Truth is he lost $3000 on his trade or about 20-25%. What made this deal so attractive was the rebate. Coming to him and saying lets get you in a new tractor for $500 sounded good. Would have to anyone, me included. If there where no rebate and they came and said lets get you in a new tractor for only $3000 he would have said "no, I am happy with my current one".
I get calls monthly from my family members trying to get me to trade one of my 3 trucks in. They always have deals like this going. I used to jump all over them every 12 to 18 months. Times have changed and the last 3 years I am content driving the same things since I now have them all payed off. No payment is nice also.
Chris
Chris
Diamondpilot
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beppington
Elite Member
I think you're talking in terms of "trying to time the market". The value of his new tractor may go lower, but it also might go higher. (Not that he's trying to sell it (nor was he trying to sell his previous one) ... This is all just theory & predictions)
And, actually I'm not sure that whether the value of the new tractor goes up or down from here even matters, since his old one should follow approximately the same trend.
No matter ... I think he got a very good deal. And I don't see any way that in 3, 4 or 5 years I'm not going to still think that.
Don87
Elite Member
I couldn't agree more!
Describe the trade any way you want..........but 500 bucks for a new tractor sounds like a plan to me
crazyal
Super Member
I think it's best to not try and figure out numbers on who paid what and how. For $500 the OP got to get a 3 year newer tractor with basically 0 hours. If the value drops more on the new tractor it's still not likely going to drop any more than what his old tractor with more hours would have been (plus the $500 difference). If he planed on keeping the old tractor for say 20 years now for $500 he got 3 more years. I say congrats!
the fat kid
Bronze Member
I too say congrats and nice deal!!
Carl Bert
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I went to another dealer. He said the best he would do was a 25% loss. That would have been $10,000 out of my pocket for 15 hours of use. Honestly, this is what I was quoted.
I still can't see how any vehicle can lose that much, just driving off the lot. Anyway it is what it is, and needless to say, unless someone calls me up and offers me a new tractor for $500, I will be keeping what I have for the for seeable future.
DavesTractor
Elite Member
The issue with resale on an almost new unit is that the dealer still must find a buyer for it. Most buyers finance, and generally the financing rates on a brand new unit are much better than on used. The typical buyer wants 20-25% off new price if he is going to buy used, even if barely used. So even if a dealer found someone to buy at only 15% off normal new price and the dealer wanted 5% for his profit on the deal...here we are at 20%. So to a dealer a 3 month old unit with 20 hours has a real similar value to a 12 month old tractor with 100 hours. Better off to run it for a couple of years, you'll probably get a similar trade-in value and the tractor will have earned it's keep. Another issue, as someone else alluded to already, a dealer is not going to pay you more in trade then he can buy a new one for via his OEM after rebates. A final factor is some dealers are cash strapped and not all can easily put a used tractor on flooring.
Instead of trading, tell some of your buddies about your tractor. Offer it to them for $2500 less than what you paid and see if anybody nibbles.
Interesting discussion. Not sure if any of this will help but when I bought my old tractor in 2008 I shopped all over the 5 state area around me and found the best deal I could get which happened to be close to home. I paid $1000 less than the lowest price I found anywhere else. After signing the papers I told the dealer he was $1000 less and I asked him why. At the time he was just trying to expand from large tractor sales into CUTS and had cut his profit. I figured I got a good price. The way I'm looking at this deal is that regardless of what I paid for the old one, I just got a whole setup that is 3 years newer, a new warranty, and all I paid out of pocket was $500. I essentially used my old tractor for 3 years (400 hours) at a cost of $500 and they gave me a new one in exchange for my old one. I sure could have just sold my old tractor myself and bought the new one and kept the rebate myself. But I would have had to do the selling and made sure I sold it for no more than $3000 less than what I paid new. That would have been about 18% less than I paid new. Not sure if I could have made that happen and if so how much time would I have to work at selling it? I still figure the dealer did me a huge favor by offering this deal and the best thing is that he's doing all the work and taking all the risk. And he is betting he can still make money, again his risk, not mine. The dealer did tell me that he was working hard to get more "points" with JD so he could keep his CUT franchise. So regardless of why this happened I'm happy, and I know you are all happy for me so thanks. BTW, I think he's still looking for one or two more used 2520's in good shape. I really do enjoy reading all the thoughts and speculation since the world of sales is foreign to me. P.S. another interesting point. By the time I did all the necessary maintenance that would have been due on my old machine I figure I would have spent over $400 in the next few months. I don't have to do any of this on the new machine. Another reason this was a good deal for me.