Is there any incentive to pay off your tractor early?

[daugen]

Same as Richard said. My HO ins. does cover things in my garage, small mowers, tools, some equipment etc. but not my tractor because I take it off property.

George, I had the same issue of going "off property", in my case having to run about half a mile on public roads while getting around to the back of my property, which I can't otherwise access directly due to a pond and swamp. So to mow my roadside on a second road, I have to go off property and "round the block". I explained this to my homeowner carrier and they said no problem for either of my tractors. The whole issue changes if you accept money or trade/barter while off property or even on your own property. If you use your equipment for money making enterprises, your homeowners policy has a nice exclusion for that. But if you don't, there is some leeway, and might be worth a call to your insurance company. If you are a professional farmer, you need a farmowners policy and I'm quite sure all farmers know that.

One can also purchase an inland marine policy, aka a "floater" policy as it covers equipment in transit or off premises anywhere in the US. You can purchase that even if you aren't a professional farmer, just like insuring your wife's wedding ring, or whatever. This policy offers coverage beyond the homeowners, just like BigCountry is describing for the Kubota policy, which is a commercial inland marine policy for the benefit of both Kubota and the tractor owner. Once the note is paid off, Kubota's interest drops off and you can either drop the insurance or keep it for your own benefit.
Just be careful the coverage doesn't change or lessen once the lienholder is dropped off.

I have exactly what many of you have, having bought my Kubota on the 0% interest plan. I think the savings for cash at the time was about 2 grand on a 50 grand package. So nothing is free... But I surely did better than that in my mutual fund investments over the last five years so I am way ahead of the game, as are most of you.
My Kubota's last payment is this October. :thumbsup: My current policy will cover me if I go in my woods and break the glass in my cab, subject to some deductible I'm sure. My homeowners would say the tractor was in my ccc, care custody and control and would deny the claim usually.
So extra cost specialty insurance does provide something extra.

I also agree if you can afford to fix it don't buy extra insurance. This is usually very profitable insurance for the insurance companies.
I am a retired insurance company underwriter and agent, btw. Getting rusty but pretty sure this all still holds true.
Always worth calling on but do NOT tell your agent you are using your equipment for business purposes unless you are ready to
buy some additional insurance. Hypotheticals are good...
Agents are not only representatives of the insured, they are also legal representatives of the insurance company by terms of their
contracts.

If you thought the market was about to crash, then perhaps taking money out at the top of the market to pay off your tractor loan might make sense. But otherwise, I would stay invested. Even bond mutual funds will get you 2-3%

 

[scdeerslayer]

With KTAC insurance, it's not really a 0% loan. The insurance is basically a 1.2% interest. If you pay the loan early you'll get a refund for the insurance cost for the remaining period of the loan. The guy that delivered my tractor said he had a client that would make double payments sometimes and would get a small check for the insurance refund each time he did that. So you could save a little if you want to drop the KTAC and do without (probably not a good idea but your choice) or be covered by your homeowners for a smaller amount.

 

[Industrial Toys]

A tractor, or anything for that matter is always more fun with no payments.

 

[adventure bob]

To pay it off early or not is an opportunity cost evaluation. If you have no other opportunities for the money, then there's no incentive to pay it off. However, if you take the tractor payment and add that to your mortgage you will be saving whatever your interest on the mortgage is. You have to ask yourself if theres opportunities that make more money than 0%. Even if you drop it in a 1.5% CD, your making more money than using the free loan. The second question you have to ask yourself on free money is cashflow. If you have the means to pay it off, your monthly cashflow gets better.

 

[oldpilgrim]

my Pappy always said that insurance is for poor people.

I have insurance on my house, even though there is no mortgage, so I must be poor.

I have none on my tractor, even though there is no loan, so I'm not that poor.

 

[bspeedy]

Pay the tractor off. And then save the cash over the next four years and pay cash for a good used car.

Insurance on a tractor for personal use seems silly unless you are accident-prone or unless your homeowner's insurance does not cover it. My homeowner's covers my tractor and related machines for theft, etc. Does not cover my own stupidity. I self insure for my own stupidity.

I don't buy the 'Extended Warranty' on things either. Don't have a 500 dollar per year home warranty. Have a 1k deductible on the homeowners to lower the rates. High deductible on vehicle insurance as well.

Too much insurance will make you poor. Payments will make you poor.

 

[dickfoster]

I paid cash for the tractor and have no insurance on it.
I figure all insurance is just a big rip off game. After all they can't build all those big office buildings, fly around in business jets and pay for all that advertizing by paying out more than they take in.
Insurance is what really what ruined healthcare in this country. Wanna really fix healthcare, then make all health care insurance illegal and the prices for health care will come screaming down to earth in a big big hurry. I remember when people paid their own doctor bills and the doctor came to the house to care for sick people and it really wasn't all that long ago.

 

[Industrial Toys]

I have no insurance whatsoever on the property or equipment. Last time I had (several) agents in, maybe twenty years ago, they itemized every building and piece of equipment, adding it up for a shocking premium.

How are people still getting these basically all inclusive (affordable) policies?

 

[adventure bob]

There's many arguments for or against insurance but my experience specifically with KTAC is that they do a great service. I managed to drop a log on the hood and they did about $4500 in repair for the deductible. No arguments, no fighting about what was or wasn't covered. The dealer wrote the quote, a human actually familiar with tractors, as opposed to a non tractor insurer whose expertise may be cars. They paid for what he said was a result of the oops.
As to insurance and health care, there's a whole other discussion on that... It amazes me that the word "profit" is nowhere to be found when researching the big three insurance companies. The dollars are so large that people cant put it in context. However...if one were to decide that the amount of capital drain insurance companies put on the system were to be eliminated by eliminating insurance, then those dollars could pay for an awful lot of healthcare.

 

[ovrszd]

Insurance is over priced. Until you need it. I had a $193,000 claim 7 years ago. All of the insurance premiums I've paid to date, and those that I might pay over the next 20 years do not equal that amount.