Kubota still offering 0 percent financing

[Hay Dude]

The difference here is that the lender is looking at their entire tranche of loans and how those loans as a group make money. If they make all loans at zero percent, the money has to come from somewhere else. In the real world of finance they may give 0% to 5-20% of their customers. The other customers, with worse credit, pay higher rates. The government tells lenders they have to keep their overall risk at X%. (It changes so that is why X rather than a fixed number). The bank can literally loan out more money by giving excellent credit customers a 0% loan. Many of those customers would pay cash otherwise and those numbers don't offset the riskier deals.

So yes, the bank is going to lose money on some deals, but that helps them make even more money on other deals. The concept is similar to loss- leaders in retail. The grocery store can afford to sell some things at less than cost to get customers in the door. They will make up the difference on other products.

Agree, but no bank could exist if ALL loans were 0%. That’s fairy tale stuff or socialism where the government buys down rates to 0 with taxpayer money.

 

[Torvy]

Agree, but no bank could exist if ALL loans were 0%. That’s fairy tale stuff or socialism where the government buys down rates to 0 with taxpayer money.

Agreed, no bank advertises 0% to all either. I am happy to use their money. I can always get 0% if they are offering.

Now that I have my house deal done, I can start looking with a little more urgency for a tractor.

 

[rScotty]

Your lack of understanding the difference between a Vanguard fund and an S&P indexed fund is the problem. Vanguard is just a company that sells investment products. An S&P fund uses the same 500 stocks that make up that index. Vanguard is just one company that offer that type of fund. Basically, the fund goes up and down with the broader market. Other funds have completely different makeups and goals. They can have more or less risk than an S&P fund and provide more or less income. Over time (5-7 years) the S&P has almost always produced 10% returns. So yes, I would 100% bet my house on that. The only way I lose would be if we descend into anarchy.

The beauty of an S&P fund is that there are no mistakes to make. They are only invested in those 500 stocks. It is buy and hold. They are not playing games with trying to chase peaks and troughs. They are spread across industries which mitigates risk.

Yep. What he said.... it is simply buy and hold. What you lose is instant access to your cash. What you gain is more of the same. I was going on 60 when it finally dawned on me how it works.

I've no clear idea of how we got into this discussion, but there's no secret magic to that type of widely based index fund. It does work. It can't help working because that is the way the world of money works. The downside is it takes time. The profit happens on its own schedule, not ours.

good luck out there, its a bit of a tar pit.
rScotty

 

[arrow]

Yep. What he said.... it is simply buy and hold. What you lose is instant access to your cash. What you gain is more of the same. I was going on 60 when it finally dawned on me how it works.

I've no clear idea of how we got into this discussion, but there's no secret magic to that type of widely based index fund. It does work. It can't help working because that is the way the world of money works. The downside is it takes time. The profit happens on its own schedule, not ours.

good luck out there, its a bit of a tar pit.
rScotty

"Your lack of understanding" is simply a tactic by the less endowed. So if you're a "what he said" follower of this guy, first attempt to denigrate then spew what you need to spew as if it's gospel. You Scotty seem more of a gentleman to simply tag along with arrogance.
His students must adore him if he is so arrogant w them as well.

It is mostly the companies themselves offering this as they have product to tag a price on that incorporates an interest calculation built into the pricing of the product.
If say Kubota company is offering 0% loans, that is their own financing company doing so.
Of course there are manufacturers who use banks for true percentage loans. I also realize that unions between banks and companies exist if the company is not doing its own holdings.
If such companies offering 0% are indeed in coo hoots with a bank who is doing the holding, you can rest assured that the bank has skin in that game directly from the manufacturer.

I have witnessed no advertising from a bank or credit union that has stated "borrow $10,000 with no interest for 84 months". I would need to be enlightened in that regard.
I have seen this with cars, tractors, furniture where actual goods were being traded.

 

[ljjhouser]

Don't think I will comment until I visit the library. When I saw the name of the thread I know we were in trouble???

 

[arrow]

Agreed, no bank advertises 0% to all either. I am happy to use their money. I can always get 0% if they are offering.

Now that I have my house deal done, I can start looking with a little more urgency for a tractor.

Oh I see.
It is of little wonder that you would bet your new house since you have no sentimental attachment as yet...
Also, what bank do you know of that is simply in the business of making money, offers 0% loans directly?

 

[jyoutz]

Oh I see.
It is of little wonder that you would bet your new house since you have no sentimental attachment as yet...
Also, what bank do you know of that is simply in the business of making money, offers 0% loans directly?

My credit union offers extremely low interest loans for new vehicles: 1.9%

 

[arrow]

My credit union offers extremely low interest loans for new vehicles: 1.9%

Yeah, so does mine. 1.7% or they did 3 months ago when I purchased the wife's new CX 5.
I am not thinking they would offer me what I financed for nothing however.

Jyou, you're an old timer here as i am. Nice to see some of the veterans still around.

 

[rScotty]

Yeah, so does mine. 1.7% or they did 3 months ago when I purchased the wife's new CX 5.
I am not thinking they would offer me what I financed for nothing however.

Jyou, you're an old timer here as i am. Nice to see some of the veterans still around.

In that case, you don't even care if the bank offers to finance you for nothing. You can do better than nothing! Because at a 1.7% loan today, anyone with the price of a new CX 5 in the bank - for example in a retirement account - can create their own 0% loan.

my local bank just sent me an bulk mail email advertisement saying they had raised their interest rate on savings accounts to 2.1%.

So by using only local institutions and staying with FDIC insured accountsm, suppose we were to shift enough money to cover the CX 5 loan from something like a retirement account over to that bank's savings account. Now we can take the CX 5 loan at 1.7%, cover that with a bank account paying 2.1%, and not only write our own zero percent loan.... we are still making 0.4% interest.

This is exactly how financial bubbles happen and then burst.

But until they do, if we widen that type of dollar shuffling out to include international banking & government incentives - we can see how Kubota might be able to do something similar to offer a real 0% financing on their tractors.

rScotty

 

[arrow]

The trouble w this plan scotty is that Kubota has a propensity of offering 0% all of the time. They were doing this even in 2012 when i was looking for a new machine. Back then I could not equate what i was looking at to the price they were demanding. I was saying "this is a $17,500 machine. Where are they getting $21,500 from?". I asked "what's the cash price" and was told "$21K". That was laughable.
Not 5 years before, this was a $12,500 tractor but thats when steel prices went crazy. Besides, we all are well aware that Kubota isn't shuffling anything.
They are simply putting their finance charge within the purchase price and calling it a 0% loan.
In reality, they are covered legally speaking to do such but it is still an around the bend tactic in my mind.
I will say it is an ingenious plan because it gives the "appearances" that everyone is a winner.

As far as my credit union goes, they average about a .17 to .5 roi on savings and checking. They do offer over 2% as incentive for about 6 months on new checking accounts, then it disappears.

Another old-timer eh Scotty. Do you also wonder where the time went?