0% doesn't always mean 0%

[rockshaft]

Good input. It is nice to see what customers think is fair. We have to balance simplicity, by customers wanting options. Ironically, simplicity is perceived by many as fair and honest, where a complex set of options, even if clearly defined, are seen by some as a sales pitch.

I guess we could say "this is 0%, but when you calculate the loss of discounts, it actually comes to 2.79%, even though the contract wiill show 0%". I just made up the 2.79% number, but you get the drift. Seems reasonable, and I sort of like the idea. But then they ask, "what if I pay it off early" and that opens another discussion, since if you lose all discounts up front, you can't gain any of them back by paying off a 0% loan early.

Keep up the input if you all don't mind. I need to learn how to better sell ya'll tractors.

When I add up my payments (installments as JD calls them) I have the original price I was quoted (minus my deposit). I've done this twice over the years, and as I said before, none of these caveats came up during my price negotiations. I just worked my best deal, asked if the promo financing was available, and done. I like the ease with which it has worked. I never mentioned cash or monthly payment amounts or anything (until the end). I always just figured JD Financial was more about selling machines than earning interest on loans...

 

[teg]

...Most people on these forums are not, in my opinion, "typical" buyers, so we as a group do alot more research than probably most.....

:laughing: I found the site *after* I bought... otherwise, I might not have bought the tractor I ended up with. I went to 4 places, the first one was the highest price but asked me to let them "beat" the other dealers but I never went back to let them try. Ironically, that's the dealer I buy all my supplies from and conciser them my "adopted" dealer.

...installments as JD calls them...

JD is a horse of another color. They hold a pretty tight grip on the price because they can, much like Sthil. Some of the "other" tractor brands have to compete partially on price.

 

[Ram4x4]

Ram4x4, I am interested in your response, as I have debated with dealers the best way to handle the buydown aspect of the 0%. For you, maybe it would have been more palatable if the dealer had all his prices at 0%, then just mentioned that there was deep discounts for cash? I mean, if you are planning to go with 0%, that sure sounds better than getting the cash price and having to buy up. Same deal, different angle.

Surely we know that 0% is not free, someone pays for the free interest. (I know there are occasional examples where 0% is offered without a cash discount option, but that is very rare). What is the best manner for a dealer to approach this? This is a serious question. There are 3 basic prices on each model. Cash or standard rate (largest discounts/rebates), reduced rate such as 4.25% (no discounts given, no buydowns needed) and 0% (buydowns needed). So when a customer says, "how much for a 5035", a dealer must either interogate the customer to find out how he wants to buy, or throw out a price and then upsell/rebate from there. It's not easy.

I used to question the buyer before giving a price, but I hate that personally. So we decided the true price is what a buyer will hand to a seller in the equivalent of $100 bills. That is the price. If you want 0%, you pay more, exactly the amount it will cost me.

Generally buying the 0%, if you do not pay it off early, is a little better deal than buying at standard or reduced rate. But since you have paid the "interest" up front, it only pencils out against the other rates had you ran all loans to full term. If you are going to pay it off early, take the discounts up front and use standard rate.

Always interested in feedback. Its how we learn.

Here's my take on it all. If you are offering 0% then it should be just that. If you can't do it and make a profit without someone (i.e. the customer) having to eat the extra money, then don't offer it, period.

As I said, if I pay the "interest" up front then it's not really 0%, so why even have or offer such advertising if it isn't really what it appears to be? Mahindra is offering something that isn't what they claim it to be.

There should only be one price, period. If I pay cash, I pay that price. If I finance through the dealer then I pay that price plus the interest (whatever the rate is) over the life of the loan.

When I finance something I usually do it through my own financial institution as the majority of dealerships can rarely, if ever match the interest rate I get through them. That's not to say I won't use the dealers financing if they can beat the interest rate, after all my aim is to gt the best deal I can and interest rates are the competition amongst financial institutions.

In my opinion this 0% offer from Mahindra is a bit of a shyster deal since it isn't really 0%. Some might even consider it false advertising, but I'm not interested in pursuing such an angle.

 

[Ram4x4]

For me I would have been pleased as can be if I were told here is our 0% price and here is the cash or self financing price. It would have taken all the angst out of my purchase. I just finished the refi of the Mahinra loan that was closed 3/19, so I am back at my 2.99 and everything is great.

Kootch, I think you missed the point.

When I see an advertisement for 0% interest for 60 months, I am not expecting to see a $4,000 increase in the sales price if I choose those terms.

The price of the tractor should be the price of the tractor, period. Be it cash, financed or what have you. The price of the tractor should have a profit built into it for the tractor itself. If I finance it then the interest I pay is the profit the financial arm makes for floating the money of the loan.

If they aren't able, or willing to offer the same price at 0% then it is simply NOT 0% and the impression left is one of less than honorable intent.

This business of price being dependent on the financial terms you choose is less than honest in my opinion.

The bottom line is simply that Mahindra advertises 0% interest when in fact it really isn't. You get a jacked up price and are expected to pay that difference up front, so it is NOT 0% in any stretch of the word.

I tell ya, after this conversation and reading some of the posts here, if any of the other brands of tractor offered anything remotely close to the capabilities of the 5035 and in the same ballpark pricewise, I'd be choosing not to buy the Mahindra. That, however isn't the case. Sooo, when I am ready to buy in the next couple of months it will be a 5035, but I will not be using their financing, or their "0%" BS offer. I will negotiate cash price and use my own financial institution.

 

[Ram4x4]

The 0% buydown on the Mahindra is on a sliding scale, since it doesn't cost nearly as much to provide 0% on a $15k rig as it does on a $40k rig. I believe the 0% buydown (dealer lingo for what we have to pay to go from 4.25% to 0%) is about $1375 on a Max series. None of the model buydowns are $4000. Dealers can set prices however they want and I guess they could charge more for the zero than it costs them, but that does not seem smart.

I just mention this as I don't want others to think there is a $4k price tag on 0% for 60 months. $1375 isn't bad for 5 years of financing a $15-20K rig. $23/month is what that cost. I spend more than that in coffee....

Yes, but if you tack on $1375 to the price it isn't exactly 0% anymore is it?

What's confusing to most is all these BS numbers games the dealers try to play.

Only the most naive buy into the sucker games that car dealers have been pulling for years, and is well known by anyone that's been around the block more than once.

I'm just sad to see this same game is apparently being played by the tractor dealers as well.

 

[Ram4x4]

4000$ did seem like a stretch to me! But even so, 1375$ is something- and this discussion of financing buydown never came into play with either of my tractor purchases. I negotiated a price (no talk of cash or financing), and when I thought it was a price I was willing to pay, I agreed and asked for 0%financing. There is no buydown in my case- built into the package price? yeah certainly, but it's my opinion that comes from their end (dealer/manufacturer).

It's no stretch. I received two quotes on a 5035 HST with FEL. $25,000 cash or $29,000 if I wanted 0% interest.

 

[Ram4x4]

Ya'll have got me smiling. I am a Mahindra dealer and I have voiced my opinion about this tactic.......

You really can't get something for nothing.

Then perhaps the dealers and the company should stop advertising that we can.

 

[Ram4x4]

In 2005 I went with the 0% loan from Agricredit. I had to pay a $225.00 administrative fee in order to get it. It felt like a bee sting that took a long time to go away.

I was quoted $25,000 for a 5035 HST with FEL cash price. If the 0% interest deal would have been a $225 "administrative fee" on top of that it would have been a no brainer, but when I state I am interested in the advertised 0% deal and then get told the price of the tractor for that deal is now $29,000, it doesn't sit well with me.

 

[LAWALLSTRACTOR]

I was quoted $25,000 for a 5035 HST with FEL cash price. If the 0% interest deal would have been a $225 "administrative fee" on top of that it would have been a no brainer, but when I state I am interested in the advertised 0% deal and then get told the price of the tractor for that deal is now $29,000, it doesn't sit well with me.

Mahindra is just being up front about the whole thing, it isn't any different than the competition offering 0% or a rebate.

 

[MasseyWV]

Mahindra is just being up front about the whole thing, it isn't any different than the competition offering 0% or a rebate.

Mahindra being "up front" is not exactly the description I would use. Their 0% financing is nothing more than an elaborate scam designed to hide the true interest rate, as evidenced by having different tractor prices for cash v/s financing. Not to mention the fact that Mahindra seems to think something as simple as posting MSRP prices is a state secret.

Hiding things only makes them look dishonest. IMO