Compact Tractor Financing Comparison - Hopefully this helps someone

[Silverado21]

Trying to make sense of it all and wanted to share. Doesn't include tax, insurance or implements. All machines are HST with a FEL. Yellow cells mean the rate wasnt listed but was inferred off rates used for lower months. Prices are based on manufacturer website and may not be entirely accurate due to dealer incentives.

Also - Did all of this, still dont have a **** clue what the best choice is. Excel screen shot attached.

 

[RSR]

My interpretation of that spreadsheet is that it is a clear justification for why you should pay cash for a tractor. Up to a 25% increase in the sticker price due to interest charges, depending on the length of the loan. Ouch!

And, those that have "0% interest" just mean you should be able to get a better cash price, as the financing charge is factored in (there's no such thing as a free lunch).

 

[KennyG]

My interpretation of that spreadsheet is that it is a clear justification for why you should pay cash for a tractor. Up to a 25% increase in the sticker price due to interest charges, depending on the length of the loan. Ouch!

And, those that have "0% interest" just mean you should be able to get a better cash price, as the financing charge is factored in (there's no such thing as a free lunch).

I probably should let this go, but when there is a 0% (or any low interest rate) promotion, you have to ask "Is there dealer participation?" If there is not, the factory does the financing and the cash and financed price is the same. If the dealer has to "participate" he can discount for cash. Some states require this to be disclosed in the fine print. Just ask and the dealer will tell you. I got 3 year 0% on my John Deere, same price as cash. 4 or 5 year 0% was available, but the dealer said he had to increase the price for those deals because it cost him.

 

[RSR]

I probably should let this go, but when there is a 0% (or any low interest rate) promotion, you have to ask "Is there dealer participation?" If there is not, the factory does the financing and the cash and financed price is the same. If the dealer has to "participate" he can discount for cash. Some states require this to be disclosed in the fine print. Just ask and the dealer will tell you. I got 3 year 0% on my John Deere, same price as cash. 4 or 5 year 0% was available, but the dealer said he had to increase the price for those deals because it cost him.

I didn't realize there was variation on whether financing was provided by either the dealer, or the manufacturer. Maybe this explains why Kubota used to not offer cash rebates at all, until recently? When I was shopping they were willing to offer rebates in the neighborhood of $750-$1,000, but I believe that was a relatively recent development.

Regardless, as you say, the financing is either carried by the dealer or the manufacturer. That is, at 0% someone is paying finance charges, which means if you buy a 0% financed tractor that cost is being passed on to you through increased sticker price.

When I was shopping for tractors, any company that wouldn't give a cash discount left a bad taste in my mouth, as that basically told me they were overcharging for their tractor at the cash price.

 

[edgarrian]

84 months seems like a person cant afford one. I paid cash for mine. In 10 years we will see longer term loans. Its a guarantee. I don't like that personally as i believe 84 is far to long. Its gonna make big trouble.

 

[cjoffutt]

84 months seems like a person cant afford one. I paid cash for mine. In 10 years we will see longer term loans. Its a guarantee. I don't like that personally as i believe 84 is far to long. Its gonna make big trouble.

Completely agree with your 84 months seems like someone cannot/shouldn't buy statement. I've also never understood why anyone simply makes the monthly minimums.

Take the Kioti I purchased in August, I put the most I could down on it (60%), financed the rest due to some other projects going on at the time. But Christmas work bonus was thrown right onto Decembers payment to knock down a good chunk instead of spending it on other nonsense. I've also doubled the minimum every other month along the way. I'm already planning on dumping the bulk of my tax return onto it as well. Just seems silly to me to not pay off one's debts asap so my money can start earning money for myself again and not someone else.

While I understand that not everyone in the world can pay ABC instead of XYZ, 95% of people can look at their monthly expenses and see where there is a LOT to save/stop spending to pay off something else.

 

[KennyG]

Regardless, as you say, the financing is either carried by the dealer or the manufacturer. That is, at 0% someone is paying finance charges, which means if you buy a 0% financed tractor that cost is being passed on to you through increased sticker price.

Logically, that makes sense but there is a lot more that goes into equipment pricing than cost of production and a set profit. I think we all know that if you buy a new 2020 car in December 2019 it will probably cost a lot more than it will in September 2020 when the manufacturer wants to clear out inventory. The way I look at it, if I definitely want to buy Brand X, Model Y and the dealer has no incentive to take cash over 0% financing, I will always finance it.

 

[RSR]

Logically, that makes sense but there is a lot more that goes into equipment pricing than cost of production and a set profit. I think we all know that if you buy a new 2020 car in December 2019 it will probably cost a lot more than it will in September 2020 when the manufacturer wants to clear out inventory. The way I look at it, if I definitely want to buy Brand X, Model Y and the dealer has no incentive to take cash over 0% financing, I will always finance it.

Sure. The decision is ultimately going to come down to what you want/value, and how much you are willing to pay.

What bothers me, however, is when people think that 0% finance means they are getting a better deal. You aren't. Somebody is paying that finance charge. And, to paraphrase an old poker saying, "if you don't know who exactly is paying the finance charge, it's you."

If that doesn't matter to you, or you deem the extra expense is worth it to get what you want, then great.

 

[kenmac]

Believe it ,or not. Last time I was considering buying a new car. The car salesman told me he would sell me the car at a lower price if I financed over paying cash !.
Said he didn't care If I made one payment, then paid it off

Must be getting some sort of kick back from the finance company

 

[KennyG]

Believe it ,or not. Last time I was considering buying a new car. The car salesman told me he would sell me the car at a lower price if I financed over paying cash !.
Said he didn't care If I made one payment, then paid it off

Must be getting some sort of kick back from the finance company

That's just like a mortgage broker. The real estate company doesn't care if you pay cash or finance. The mortgage broker wants you to finance, even if you pay it all off next month. The actual mortgage company wants you to pay it off over the full 30 years (unless mortgage rates go way up).