0% loans on new tractors

[dickfoster]

Sorry, that still doesn't make sense to me. successful salespeople typically maintain a specific margin and if that margin changes because of the details of the purchase then no the price has not been set and a good salesperson will adjust the pricing to maintain that margin (that alone does not make a salesperson crooked). You may not agree that a good salesperson is one that maintains his margin but his boss probably does. Some people find it hard to believe that certain organizations think that they are actually worth more selling the same product based on their experience and ability to support after the sale and will gladly let price only motivated purchasers walk right out the door. If done right with the proper after the sale support they ultimately are more successful and breed a higher level of customer loyalty to those that understand that the purchase price is not the end game, the support is. Then of course there are dealers who cater specifically to price only purchasers, they don't always survive through the lean times that happen in the tractor industry.

Good points. As I've said before nothing comes for free and you'll end up paying someone, sometime, one way or another.

 

[murphy1244]

I once had a friend who was an F&I man for an auto dealer. The stories he used to tell me about screwing people over told me all I ever needed to know about buying cars and such from then on. They're mostly crooks. He'd laugh and tell me how he'd talk people out of their credit union to get the loan so he could bag a commission. He called it laying them away. Of course they wound up paying a lot more money. People tend to hear what they want to hear and all the crooks know it so they use people's own greed against them. If it sounds too good to be true it probably is.

I have a hard time understanding how people can purposely screw people like that. Your friend is a real a-hole. Nothing against you sir.

 

[dickfoster]

I have a hard time understanding how people can purposely screw people like that. Your friend is a real a-hole. Nothing against you sir.

Yeah I know he was but that was a lot of years ago. I could never do anything like that myself and have always played it straight whether or not people liked what I had to say. In the long run, it has always paid off for me to be straightforward and honest. I found the smarter people appreciated that and usually became repeat customers. The kind of customer you want to come back and those I took good care of. Those who were looking for something different weren't the kind that I was looking to develop a long term customer relationship with anyway, I'd rather they went and bothered my competition. In the end most people tend to vote with their feet. For customers who were clearly trying to abuse me, I'd simply show them the door. Not all business is worth having as both parties have to be satisfied.

 

[MORRISONSTEEL]

Yeah I know he was but that was a lot of years ago. I could never do anything like that myself and have always played it straight whether or not people liked what I had to say. In the long run, it has always paid off for me to be straightforward and honest. I found the smarter people appreciated that and usually became repeat customers. The kind of customer you want to come back and those I took good care of. Those who were looking for something different weren't the kind that I was looking to develop a long term customer relationship with anyway, I'd rather they went and bothered my competition. In the end most people tend to vote with their feet. For customers who were clearly trying to abuse me, I'd simply show them the door. Not all business is worth having as both parties have to be satisfied.

also great points, you don't have to be crooked to be successful in sales.

 

[dickfoster]

also great points, you don't have to be crooked to be successful in sales.

Actually, I found quite the opposite to be true. I had loyal customers and I was loyal to my customers, that way everyone wins. It made sense to me and I slept well.

 

[Cougsfan]

Actually, I found quite the opposite to be true. I had loyal customers and I was loyal to my customers, that way everyone wins. It made sense to me and I slept well.

I have seen my share of both good salesmen and bad salesmen over the years. The good ones weren't really salesmen at all. They were people trying to help you as opposed to making a sale. in doing so, they might make a sale. The bad ones primarily are interested in making a sale.

 

[DavesTractor]

There is another angle. At this point in my life I'm a cash buyer, whether for a truck, tractor or whatever. If I buy a new Laramie diesel for $60k, I do not want them to pack the cost of 0% financing into that. I do not want to pay for that, and I know it is not free. I want the discount.

On a tractor, it is the same deal. As a dealer, I can either offer my products at 0% and give you zero discounts and pass on my rate buy-down charges as already packed into the price, or I can offer you the best price where you either pay me or I give you a rate that is what we call standard rate. Standard rate is the real finance percentage a bank wants to make a profit on your loan.

So why do we even offer options? I guess the marketing folks have found that different options, whether it be discounts or what seems to be 0% financing attracts customers. On our lot, everything is priced at cash/standard rate. That is the real price. If you want 0%, no problem, we work the numbers and you get zero percent. But you pay for it, one way or the other. That is always the case.

The one exception is when a company is way over stocked on an item or for whatever reason they need to move some stock fast, they may be willing for a time to eat some of the cost of the low rate financing out of their margins. But this is rare indeed.

It is interesting seeing the light bulb go on for some folks. It's like "hey, that's not really free!". Correct. Yet if company ABC is offering 0% it draws customers, so company XYZ matches it. No free lunch folks, but that doesn't mean there are not lunches with better value than others.

 

[check]

There is another angle. At this point in my life I'm a cash buyer, whether for a truck, tractor or whatever. If I buy a new Laramie diesel for $60k, I do not want them to pack the cost of 0% financing into that. I do not want to pay for that, and I know it is not free. I want the discount. On a tractor, it is the same deal. As a dealer, I can either offer my products at 0% and give you zero discounts and pass on my rate buy-down charges as already packed into the price, or I can offer you the best price where you either pay me or I give you a rate that is what we call standard rate. Standard rate is the real finance percentage a bank wants to make a profit on your loan. So why do we even offer options? I guess the marketing folks have found that different options, whether it be discounts or what seems to be 0% financing attracts customers. On our lot, everything is priced at cash/standard rate. That is the real price. If you want 0%, no problem, we work the numbers and you get zero percent. But you pay for it, one way or the other. That is always the case. The one exception is when a company is way over stocked on an item or for whatever reason they need to move some stock fast, they may be willing for a time to eat some of the cost of the low rate financing out of their margins. But this is rare indeed. It is interesting seeing the light bulb go on for some folks. It's like "hey, that's not really free!". Correct. Yet if company ABC is offering 0% it draws customers, so company XYZ matches it. No free lunch folks, but that doesn't mean there are not lunches with better value than others.

My Kubota dealer will always send me a quote with two prices: one with 0% financing and one without. That way I can figure out the true cost of the loan myself, although he will simply give me the "actual" interest rate if I ask for it. Then I can negotiate the price of either of these two options independently. It's all very straightforward. And to compare prices, I simply ask a competitor Kubota dealer exact same questions.

And I agree that the 0% financing option is a valuable option for both the dealer and the consumer. As long as the consumer is aware of the real cost of the money, she or he can make their choice. In my case, I just look at the difference between my mortgage rate (which contains a line of credit that I can add to or subtract from at any time), and the underlying interest rate on the 0% tractor deal. But, if you cannot cough up the cash right now, it is either the 0% deal or no tractor – a no-brainer! And who wants to be tractorless? (Good God, what an awful thought!)

BTW, do NOT Pay off one of the 0% loans prematurely! You have paid for in advance, and you're just giving the money back again if you pay it off early. (Think about it.)

 

[CobyRupert]

BTW, do NOT Pay off one of the 0% loans prematurely! You have paid for in advance, and you're just giving the money back again if you pay it off early. (Think about it.)

Hmm, good point! (I think).
I owe about $4000 dollars on a 5 year 0% loan, and am constantly tempted to just pay it off because: 1) I hate having any debts. 2) I hate seeing the payment deducted every month, hate having to do the accounting, hate having to think "ok here's my checking account balance, oh wait, in 2 days it's going to be different."

I guess the reason I paid extra "up front" purchase price cost for 0% (but not really "up front" cause it's spread out over 5 years) was similar to why anyone (with cash) would choose to pay interest:
1) The "cash" can stay with me and (hopefully) make more in dividends than the "interest"/"extra purchase price" on the loan is costing.
2) I think of the "interest" (or greater purchase price) as something similar to the cost of insurance: I still have the cash on hand for emergencies.

In hindsight I should of paid "cash price" for the tractor, and financed with a 3rd party or factory non 0% loan, then I'd have the advantages mentioned above AND the option to pay off early when I felt comfortable; thereby eliminating my dislike of payments, and (arguably) "save" some interest costs.
Hmmm.. (IMHO) above sentence reaffirms that as much as you crunch numbers, it does come down to "feelings".

 

[XSFMED18D]

Ive seen Kioti, Mahindra and almost every other manufacturer offer both a 0% price and a more expensive cash price. With Kubota, I offered to pay cash and the price was the same as 0%. So in that case, isnt this a true 0% deal? If there is no difference between the cash and finance price then it would seem that you could invest the money not used in paying cash and make that money work for you. Am I looking at this incorrectly?