0% loans on new tractors

[check]

Hmm, good point! (I think).
I owe about $4000 dollars on a 5 year 0% loan, and am constantly tempted to just pay it off because: 1) I hate having any debts. 2) I hate seeing the payment deducted every month, hate having to do the accounting, hate having to think "ok here's my checking account balance, oh wait, in 2 days it's going to be different."

I guess the reason I paid extra "up front" purchase price cost for 0% (but not really "up front" cause it's spread out over 5 years) was similar to why anyone (with cash) would choose to pay interest:
1) The "cash" can stay with me and (hopefully) make more in dividends than the "interest"/"extra purchase price" on the loan is costing.
2) I think of the "interest" (or greater purchase price) as something similar to the cost of insurance: I still have the cash on hand for emergencies.

In hindsight I should of paid "cash price" for the tractor, and financed with a 3rd party or factory non 0% loan, then I'd have the advantages mentioned above AND the option to pay off early when I felt comfortable; thereby eliminating my dislike of payments, and (arguably) "save" some interest costs.
Hmmm.. (IMHO) above sentence reaffirms that as much as you crunch numbers, it does come down to "feelings".

So true, Coby, and let's not forget, the greatest feeling of all is sitting on your new tractor!:thumbsup:

 

[KennyG]

Ive seen Kioti, Mahindra and almost every other manufacturer offer both a 0% price and a more expensive cash price. With Kubota, I offered to pay cash and the price was the same as 0%. So in that case, isnt this a true 0% deal? If there is no difference between the cash and finance price then it would seem that you could invest the money not used in paying cash and make that money work for you. Am I looking at this incorrectly?

In that case it is a true 0% offer. These exist although they may be a minority of the "0% financing" offers. On my JD, the cash and financed prices were the same. I was going to pay cash originally. A pretty clear contrast can be seen in the current Ford 2016 F-150 promotions. You can get $1000 off or 0% financing but not both. For someone who can't pay cash, the 0% is clearly the better deal.

 

[DavesTractor]

Ive seen Kioti, Mahindra and almost every other manufacturer offer both a 0% price and a more expensive cash price. With Kubota, I offered to pay cash and the price was the same as 0%. So in that case, isnt this a true 0% deal? If there is no difference between the cash and finance price then it would seem that you could invest the money not used in paying cash and make that money work for you. Am I looking at this incorrectly?

It would just seem that Kubota is limiting your options by not offering a discount for cash buyers. That is a penalty to many. There is no true 0% deal, there are just different ways to slice and dice it. If Kubota is not offering a discount and you are ok with the price, then it sure makes sense to use the 0% and not just give them your money. But it is factored in to the price in some manner.

I suppose their can be exceptions where market share, inventory or some other reason causes an OEM to spend the $$ on 0% and cover it with reduced margins, but that would be the exception. I have seen Mahindra adjust inventory a little by doing this in the past, but it is rare. In 2008 (I think) we were able for a limited time to offer 0/72 at the normal 2.99% price point with no difference in cost on one model that was way out of balance in inventory. That was cool.

 

[TheMan419]

Not sure that I understand, if said dealer was getting a commission from a retail note then wouldn't they want more money on a cash sale since they are losing said finance commission?

They do not get a commission. They sell the loan at a discount actually. If you finance $20K at 4% the dealer then sells the loan to the finance company any gets something less than $20K. As your interest rate goes up the closer to the $20K the dealer gets.

The 0% will almost always be through the factory. Why? They want to move more units. Your credit union cannot loan to you at 0%, they have to make money. They do that on the interest rate.

The bank/credit union lives on the spread. They pay you 1% (**** now **** near zero) on your deposit. They loan the money out at 4% (or whatever mortgage rates are these days). That difference is what they use to fund the operation and make a profit.