Please Read If You Are A Newbie Tractor Buyer

[Hay Dude]

Trade in value is worthless in and of itself. A more useful value is the % of purchase price you get back upon sale, all else being equal. When age, wear and condition are equal, there is essentially little to no difference.

In other words, higher trade in value is just a function of higher initial price.

I have found with almost every used tractors I have purchased, it has sold for more than I paid for it.

 

[ArlyA]

I almost never consider sale/resale/trade-in value as I almost never buy anything with the intention or even vague thought of ever selling it. I buy it to use it and I usually use it until it dies and has no value beyond scrap.

You got that right. I buy tools to use, not necessarily sell later.

 

[workinonit]

Since I was born we had at least one tractor and usually multiple. So I've always had one. When I bought my first tractor of my own the only decision was what size. 5310 or 5510. I bought the 5310. When I sold that one 20 years later the only decision was M or E. I selected the E.

 

[Cahaba Valley Farm]

In this next update I want to dispel two myths that this industry peddles to entice consumers to spend more of their money at the time of sale. The first is zero percent financing.

There is NO such thing as free financing. It doesn't exist period! To call financing free is just a lie. This is just a deceptive business practice by the industry and manufacturers to entice you the consumer into spending more money at the time of sale because you have been fooled into thinking you are getting something for free. What is actually happening is the dealers have rolled the financing costs into the price of the equipment where it is hidden from you and you don't see it. If the industry had more integrity they would refer to it as "interest included" not zero percent. In many cases the interest is much lower compared to what an outside lender would charge you and the term of the loan can be longer IF you qualify. That's another little truth that is not disclosed to you in the marketing. You have to qualify for the incentives that they are advertising. A lot of people will never qualify for 72 or 84 months of financing.

I will add to this by saying the manufacturers financing is offered at wholesale rates because what they're selling you is at retail rates. That's the only reason/incentive behind them giving you low rate financing. What they give up with lower financing rates they more then make up for in higher profit margins on the equipment and options you are financing.

The other myth I want to debunk is it is better to purchase options at the time of sale. Lets get something out of the way right now. You don't save any money purchasing options at the time of sale. Options which are a combination of parts and service are sold to you at retail prices. This is one of the main sources of revenue for a dealership's parts and service department. Options are pure gravy for any dealer. This is why you need to price the options out along with the tractor itself when you are getting multiple quotes. The options can vary significantly in price from dealer to dealer.

 

[Fixastuff]

Have you got bought the perfect tractor yet?

 

[Cahaba Valley Farm]

Have you got bought the perfect tractor yet?

There is no perfect tractor or brand. I think the closest to perfect any tractor ever came was the old Fords. To answer your question, I am in the middle of buying a tractor now.

 

[Torvy]

In technical terms, TINSTAAFL. There is no such thing as a free lunch. It is true that all business costs are ultimately passed on to consumers (why business taxes are no more than a hidden tax on consumers). All forms of advertising expenses are rolled into the overall prices for everyone. Same reason some grocery stores can sell milk for $1 a gallon. Sure, they lose money on that gallon, but most people buy other stuff, too.

In practical terms, free financing is absolutely a thing. Will someone pay for it? Sure. Good credit is always required to get the best deals. Credit affects the price of your insurance, too. It is in the fine print, but 'on available credit' is the out. They legally cannot advertise a rate without a certain percentage actually getting it.

The way government regulations affect the lending industry, they need to keep a mix of credit in their overall loan portfolio. Many people with good credit can forgo a loan of they want. Lenders offer 0% to attract those high credit buyers to use credit. The lender loses money on those individuals, but makes up for it by having greater ability to loan more money to people with less than perfect credit. Simply put, if I make 100k loans to 2 people, I can loan one with 800+ credit at 0% and then can risk the guy with a 600 score at 10%. Effectively, I have 200k loaned out at 5%, but with the risk of a 700 score. I could just loan only to people with 700 scores, but a) that reduces my potential market and b) the government requires lenders to lend money to people they otherwise would not.

Right now, dealers are getting away with cash discounts. As the market tightens back up, people with excellent credit will get that discount and 0%. A little different in the auto finance world as dealerships can add in interest (usually up to 2% points). Even then, in a competitive market, excellent credit consumers will just walk. Ultimately, lenders need excellent credit customers more than vice versa.

So yes, in the aggregate it is not 'free'. If it is free to me, I am fine with them making up the difference on someone else.

 

[Cahaba Valley Farm]

In technical terms, TINSTAAFL. There is no such thing as a free lunch. It is true that all business costs are ultimately passed on to consumers (why business taxes are no more than a hidden tax on consumers). All forms of advertising expenses are rolled into the overall prices for everyone. Same reason some grocery stores can sell milk for $1 a gallon. Sure, they lose money on that gallon, but most people buy other stuff, too.

In practical terms, free financing is absolutely a thing. Will someone pay for it? Sure. Good credit is always required to get the best deals. Credit affects the price of your insurance, too. It is in the fine print, but 'on available credit' is the out. They legally cannot advertise a rate without a certain percentage actually getting it.

The way government regulations affect the lending industry, they need to keep a mix of credit in their overall loan portfolio. Many people with good credit can forgo a loan of they want. Lenders offer 0% to attract those high credit buyers to use credit. The lender loses money on those individuals, but makes up for it by having greater ability to loan more money to people with less than perfect credit. Simply put, if I make 100k loans to 2 people, I can loan one with 800+ credit at 0% and then can risk the guy with a 600 score at 10%. Effectively, I have 200k loaned out at 5%, but with the risk of a 700 score. I could just loan only to people with 700 scores, but a) that reduces my potential market and b) the government requires lenders to lend money to people they otherwise would not.

Right now, dealers are getting away with cash discounts. As the market tightens back up, people with excellent credit will get that discount and 0%. A little different in the auto finance world as dealerships can add in interest (usually up to 2% points). Even then, in a competitive market, excellent credit consumers will just walk. Ultimately, lenders need excellent credit customers more than vice versa.

So yes, in the aggregate it is not 'free'. If it is free to me, I am fine with them making up the difference on someone else.

In regards to the tractor world I think what you're saying is the time horizon is what determines the rate percentage that the consumer will be paying.

 

[IndyJay]

... Same reason some grocery stores can sell milk for $1 a gallon. Sure, they lose money on that gallon, but most people buy other stuff, too...

That is why you often see these specials include something like "Limit two per customer" or similar.

 

[TimberFarm]

I would disagree that that paying for options at time of sale costs more.
It is cheaper to get those heated/cooled seats (substitute whatever you want here) installed at the factory than to buy a "plain Jane" and then order the seats from the parts dept. and have them remove the existing and install the new.