0% was but is no longer truly 0%

[JOHNTHOMAS]

A few months ago Kubota started having a financed price and a cash price. Before that for quite awhile it was the same price cash or financed so back then 0% was truly 0%. With the cash discount then 0% financed price is no longer a true 0%.
I just ordered a B2320 financed at 0% for 60 months. If I had paid cash it would have been $700 cheaper. That works out to about 4% interest on the tractor I ordered. The discount is based on the tractor or RTV being sold. These machines can be $10000 apart with different models in the same series or with options. This means I paid a higher interest rate because I bought the least expensive model in the B series. If I had bought the B3030 with FEL MMM canopy and other attachments the interest rate would have equaled 2% or less. So, the amount financed vs the discount for that series tractor will determine the true cost of borrowing their money
This has been discussed before but it's different now than before because there is now an across the board discount for cash that was not there before.
In most cases the 0% interest for 60 months is still a good deal but take all of it (Finance the entire purchase and use your down pmnt for something else) to make it the best deal.

 

[bigbull338]

A few months ago Kubota started having a financed price and a cash price. Before that for quite awhile it was the same price cash or financed so back then 0% was truly 0%. With the cash discount then 0% financed price is no longer a true 0%.
I just ordered a B2320 financed at 0% for 60 months. If I had paid cash it would have been $700 cheaper. That works out to about 4% interest on the tractor I ordered. The discount is based on the tractor or RTV being sold. These machines can be $10000 apart with different models in the same series or with options. This means I paid a higher interest rate because I bought the least expensive model in the B series. If I had bought the B3030 with FEL MMM canopy and other attachments the interest rate would have equaled 2% or less. So, the amount financed vs the discount for that series tractor will determine the true cost of borrowing their money
This has been discussed before but it's different now than before because there is now an across the board discount for cash that was not there before.
In most cases the 0% interest for 60 months is still a good deal but take all of it (Finance the entire purchase and use your down pmnt for something else) to make it the best deal.

i found that out in oct when i bought my tractor.i was going to finance though kubota for 5yrs at 0 0 0 but was turned down because i didnt have any credit.mainly because i pay cash or borrow from the bank.my total price was $25,995.so i called my banker an told her what i was doing an she said write the check.my intrest for 5yrs at bank was $2000,so i offered my kubota dealer $24,000 an after 20mins of checking they took my off.an i save the $2000 in intrest at the bank because i knocked it off the tractor price.

 

[slowzuki]

Always been a cash rebate up here.

 

[Gator6x4]

There never has been free money on automobile or tractor purchases. The only free money is money the Banks borrow from the Federal Reserve to make high interest consumer loans with. The cost of an automobile or tractor is increased by the respective manufacture to include an actuarial loan default amount, a good interest return on money plus a projected annual corporation income growth rate. Most corporations set this at 6%. They then find a Bank or Finance Company to handle the paper work and provide the loan. The Corporation agrees to “Buy Back” or “Take Back” all defaults. Now we are ready to sell our $8,000 dollar tractor. So we increase the price too $14,000. The $14,000 dollar price will provide 0% percent financing for five (5) years; factor in a projected six (6) percent annual growth rate, an interest rate of 5-6% on the loan amount and defray out of pocket cost for all the “Buy Backs” or “Take Backs” because of loan defaults and provide a hefty profit percentage at time of sale. So the cost of the $8,000 dollar tractor has now increased to $14,000, a 75% increase in cost so the tractor can be sold at 0% for X number of years. Good Golly what a deal, where do I sign? I have just got to have one, come on break out the paper work.

Dealers with a high number of “Take Backs” or “Buy Backs” are being dropped in record numbers by manufactures. The “Buy Backs” or “Take Backs” due to loan defaults are having a negative impact on the manufactures bottom line profit projections and cannot be tolerated I don’t care how long the dealer has been in business. The high number of “Buy Back” or “Take Back” is also resulting in annual double digit price increases. The consumer will only swallow so many times the story about price increases are because of an increase in steel, rubber or plastic prices and manufactures know this.

Our job and financial economy was strong before we started having alleged 0% percent sales. Look at it now it is somewhere south of the deepest hole.

A lot of consumers have started objecting to having to pay an elevated price for a product so a Manufacture or Dealer can offer 0% percent sales. This is reducing the number of Dealers even more, and at the same time increasing unit prices and repair parts prices. A part that cost $5.00 five years ago today costs $10.00. Look at all the money we are saving by purchasing items at 0%.

So before we make a 0% purchase we need to explore other alternatives to paying besides obtaining a 0% percent loan.

 

[bp fick]

Yup, it's really 4%, give or take. But.....Kubota and others aren't going to carry zero forever.

Those of us who remember 17% consumer loans, ie; auto, boat loans, find money rates to be incredibly low. Whether it's zero, 1%,2%, 4% it is what it is and that is cheap. What's your passbook savings paying these days? Zip!

I remember coming out of the Carter administration with 22% prime rate, that when consumer loans finally fell to around 11% we were all rejoicing.

With the threat of hyper inflation always looming, in a few years, someone might just look back at these rates and declare them "the good old days". Could happen.

 

[grsthegreat]

I was offered the great 0% finance thru some dealers when i was shopping for a tractor, but they dont haggle on the prices when you finance, so 0% is not 0%.

When i bought my Kioti i came in with cash, was able to get a REAL deal off of sticker price.

so cash is LESS than 0% hehe

I refuse to ever have a mortgage or payment due again. the wife and i are debt free and plan on staying that way. If we cant afford it in cash, it doesnt get purchased.

This has kept us afloat in these troubled times.

I also paid cash for my 2004 ford f350 almost 2 years ago, and got it at a ridiculously low price.

 

[ejkessler]

Overall I agree and see where everyone is coming from. My story is that about 2 1/2 months ago when I realized 2/3 the way through this last winter I needed a cab I started my search. After contacting 7 dealerships over about a month I settled in on working with White's Tractor in New York. Throughout this time the L series tractors were only offering 0% for 48 months. I needed to extend that to decrease my payment and was going to go with the advertised 3.49% for 60 months much to my initial chagrin. Fortunately there was a delay in the arrival of some parts for the way I wanted it built from the weather. During that 1 week delay the financing went from 3.49% to 0% for 60 months and my payment dropped right at 10%. The cost of the financing at 3.49% for the balance of my trade for right at 35K was going to be about 3400.00 added to the note for interest. The deal did not change for me with the financing drop. I know there are many variables as very well laid out earlier in this thread. Straight cash deals are great when there aren't trades involved and you do have the money. Most of the banks around here aren't going to loan for most of these kinds of purchases for much less than 5 to 7% and often times higher, at least that has been my experience. Even if the cost of the loan was covering up a 1000.00 to 1500.00 buffer factor, it is still dirt cheap money Relatively speaking. As was stated earlier I still remember the late 70's and early to mid '80's and the interest rates at that time. Don't want to see that again. Just my opinion, nothing more or less.

 

[Wacky]

I have never seen "truly" 0%. You ALWAYS pay for it somehow.

 

[bp fick]

Yup, most of the posters here have pretty good, calm, wisdom.

Zero to 4 % is what it is. Cheap. OK, quibble over whether it is truly zero or if 4% is buried in the price. It is what it is. One always looks at total cost of purchase, not just price, but price plus........ delivery, financing costs, sales tax, etc. Look at the total.

But we can and do all seem to agree, if we are old enough to remember, what 22% prime rate looks like on consumer loans. I hope to God I don't live through that scenario again. Cash is great. My wife and I now live on a cash basis. But it took us a life time to get here. Without auto financing, years ago, we'd have walked to work. Not really. It was too far.

Couldn't have bought our homes without mortgages either. Glad all that is behind us. I wonder what the younger generations will have to face.

 

[two_bit_score]

0% is kinda like a 'free' lunch. It ain't. Really.

 

[crazyal]

Last year Kubota had what they called their "customer instant rebate" for buying with cash or financing by someone other than Kubota. I think it was $1000 on the B, L, and maybe M series. I think Kubota gets a number of people who finance to buy Kubota insurance so they make a profit on the insurance.

 

[grsthegreat]

Last year Kubota had what they called their "customer instant rebate" for buying with cash or financing by someone other than Kubota. I think it was $1000 on the B, L, and maybe M series. I think Kubota gets a number of people who finance to buy Kubota insurance so they make a profit on the insurance.

i got a WHOLE LOT more than $1000 off for mine when i paid cash. Today sales are slow and cash is king.

 

[bigbull338]

i knocked off $2000 when i bought my tractor.

 

[vjd57]

Well I'm going to have to disagree w/ the nay-sayers on 0% financing. Times are tough as most of us know, I'm in NH and dealers are making a modest living at best, not a killing. I have been shopping for a midsize tractor since last August (new and used). I usually buy used w/ cash on big ticket items like trucks, cars, boats, snowmobiles . . . etc. and have saved money over the years, not this time, taking delivery on a new L45 this Thursday. Why new? 0% financing.

Now I know there is no such thing as a free lunch but I think I might have gotten a free breakfast. Tractor listed for $50,650 +/- w/ options, worked them down to $40,310 and got the 0% for 60 months. Put $500 down so payment is going to be just under $700/ month w/ insurance (yes they're making some money on insurance but its required to be insured while making payments). I looked at used ones in the $30,000 - $35000 range but when you figure in the cost of interest at say 6.99 % it ends up costing almost as much. I could pay $35,000 cash for a used tractor but would be living paycheck to paycheck so not thrilled about that.

Bottom line - I'm using their money at 0% (or whatever they have hidden in the price) and have plenty of cash on hand to do other things if I choose to. Tractor is under full warranty so no worries there for a while. Sorry guys just makes too much sense to me but then again I'm only an engineer not a financial advisor.:thumbsup:

 

[timswi]

I'm not sure who handles Kubota's credit...If it's Kubota, they can make the profit on the machine and insurance which is also cheap. If they aren't moving any iron, no money is being made anywhere...The finance charge is buried somewhere, but if interest rates rise I can guarantee you that the price won't drop.

Just bought a new truck and the captive finance company charged 4.5% and gave a $2500 cash rebate which is an effective rate of around 1% on my truck. The price was negotiated and sealed before financing was discussed, so this was not buried in the price of the truck...Same thing when I bought my RTV1100, price was sealed up before any discussions as to how I as going to pay for it..The dealer couldn't have cared less.

 

[ssmith general]

Just bought my Kubota last week.

There was a 1,000 rebate if you paid cash, that is where the finance charge is hidden. But, I paid 25k for my tractor, loader, trailer, and bush hog. That's about 3000 under the price if you add that stuff up. I have no problem with businesses making money for the products they provide. In fact, I want a company I purchase items from to be healthy.

Nothing is ever free, but I shopped around and the financing options at kubota are far superior to those I saw elsewhere.

 

[rjkobbeman]

Keep in mind there hasn't always been a discount for cash, so sometimes 0% is 0%. There may be costs padded in to cover the 0%, but if the guy paying cash pays the same price, the argument is moot.

 

[unbidden]

A few months ago Kubota started having a financed price and a cash price. Before that for quite awhile it was the same price cash or financed so back then 0% was truly 0%. With the cash discount then 0% financed price is no longer a true 0%.
I just ordered a B2320 financed at 0% for 60 months. If I had paid cash it would have been $700 cheaper. That works out to about 4% interest on the tractor I ordered. The discount is based on the tractor or RTV being sold. These machines can be $10000 apart with different models in the same series or with options. This means I paid a higher interest rate because I bought the least expensive model in the B series. If I had bought the B3030 with FEL MMM canopy and other attachments the interest rate would have equaled 2% or less. So, the amount financed vs the discount for that series tractor will determine the true cost of borrowing their money
This has been discussed before but it's different now than before because there is now an across the board discount for cash that was not there before.
In most cases the 0% interest for 60 months is still a good deal but take all of it (Finance the entire purchase and use your down pmnt for something else) to make it the best deal.

That is why I walked out of the Mahindra dealership; $1000 more to finance a SCUT. Ended up with a better deal from Kubota and no difference cash or %0 financed.

 

[MessickFarmEqu]

I'm not sure who handles Kubota's credit...If it's Kubota, they can make the profit on the machine and insurance which is also cheap.

KCC is a kubota owned company. I know no special knowledge to back this up, but I suspect that Kubota maybe somehow booking the cost of the loans in Japan where the cost of funds has been near zero for years because of the counties economic stagnation. Kubota's has been very unwilling to offer any cash discounts and the only reason for that can be that the loans are costing them very little to offer.


On the insurance. Those of you who have priced it noticed that its very cheap for what it is. We've been told several times that its basicly a break even venture ment to improve the quality of their loans. I don't see how they can be making a dime on it... heck we only make $25.

 

[JOHNTHOMAS]

A few months ago Kubota started having a financed price and a cash price. Before that for quite awhile it was the same price cash or financed so back then 0% was truly 0%. With the cash discount then 0% financed price is no longer a true 0%.
I just ordered a B2320 financed at 0% for 60 months. If I had paid cash it would have been $700 cheaper. That works out to about 4% interest on the tractor I ordered. The discount is based on the tractor or RTV being sold. These machines can be $10000 apart with different models in the same series or with options. This means I paid a higher interest rate because I bought the least expensive model in the B series. If I had bought the B3030 with FEL MMM canopy and other attachments the interest rate would have equaled 2% or less. So, the amount financed vs the discount for that series tractor will determine the true cost of borrowing their money
This has been discussed before but it's different now than before because there is now an across the board discount for cash that was not there before.
In most cases the 0% interest for 60 months is still a good deal but take all of it (Finance the entire purchase and use your down pmnt for something else) to make it the best deal.

Keep in mind there hasn't always been a discount for cash, so sometimes 0% is 0%. There may be costs padded in to cover the 0%, but if the guy paying cash pays the same price, the argument is moot.

Right!!
That's the reason I posted this. Pointing out that there has been a change. It was a true 0% interest charge on a purchase to the customer previously but with the new cash discount that has changed. It was a true 0% before because there was no discount for cash. Cash buyers were subsidizing us credit buyers. Us credit buyers were paying the same price as the cash buyers but our payment was spread out in equal monthly payments with no additional amount added for interest. It was interest free before as far as actual cost to an individual buyer of a specific Kubota with payments spread over a number of months.
This is not a philosophy statement, it's an accounting statement.
$18000 cash or 60 payments monthly of $300 for a specific Kubota tractor.
To say someone is paying it in higher costs or some way isn't relative to the statement of 0% interest.
Again, the true 0% is now gone with the cash discount being offered.