Brand new tractor...appraisal?

[KretZ]

Looking into buying an RK55, trying to go through a local credit union for a better interest rate (and to keep money local). My local CU makes loans for farm equipment regularly, but the system they use to determine the value of the tractor doesn’t have RK tractors in it. So they are telling me I need to have the brand new tractor appraised by someone other than the dealership I am buying it from. I am not sure how to go about this. The value of an item is based on what people will pay for it, thus it seems like the current value of a brand new item, would be the asking price that the company is charging so long as the company is selling them regularly and staying in business? Any ideas?

 

[Torvy]

This is from my background in auto finance, so it may not be 100% apples to apples...the bank doesn't care what an asset sells for new. Their concern is for what happens if they need to repo. What can they get for it once it is used? They also have to follow Generally Accepted Accounting Practices (GAAP). In other words, they have to be able to show a regulator that they did due diligence to assess the value of an asset on their balance sheet. Bank regulators, in my experience, know the regulations very well. They tend to know too little about the actual realities of life. Ergo, they are unlikely to have a clue what a tractor is worth or what an RK is compared to another brand. So, your bank, or CU in this case, is playing CYA. The bad part for you is that the value will likely be less than full price.

That being said, your best bet is to find an independent mechanic who works on farm equipment...even better if they also sell used ones. Not sure how likely that is in your area. You might be able to find another RK dealer to quote you on the same model. Ultimately, the CU wants to make the loan, so if you make a reasonable effort, they will likely take it.

 

[workinonit]

How much lower could the CU interest rate possibly be? Go buy a green or orange tractor and you won't have any interest.

 

[Torvy]

How much lower could the CU interest rate possibly be? Go buy a green or orange tractor and you won't have any interest.

That assumes excellent credit. OP also wanted to keep money local.

 

[LD1]

Sounds like a case where "keeping it local" is more hassle than its worth. IF they dont want your money, dont give it to them and find a lending institution with less hassle and BS

 

[CADplans]

That assumes excellent credit. OP also wanted to keep money local.

If you can get a better deal using "Greene" financing, rather than local,,
use the Deere financing, then donate $100 to the bank.

Really,, why loose $300 to help the local bank get $100,, ?

 

[IndyJay]

That assumes excellent credit. OP also wanted to keep money local.

Credit Unions are non-profit.

 

[RickB]

Credit Unions are non-profit.

CU employees work for real paychecks.

 

[IndyJay]

CU employees work for real paychecks.

True.

 

[fried1765]

How much lower could the CU interest rate possibly be? Go buy a green or orange tractor and you won't have any interest.

And .......the OP will have a higher quality, commonly known/respected brand, with much higher resale (or repo) value.
Unless the bank folks are totally incompetent, they will already know this!

 

[Torvy]

Credit Unions are non-profit.

True, but that does not change the desire to keep money local.

 

[IndyJay]

"True, but that does not change the desire to keep money local."

Yes, I got that, RickB mentioned about CU employees getting paychecks and all, but local bank branches also provide paychecks to local people.
Please elaborate on the differences of how using a CU "keeps the money local" in a way that is substantively different than how a bank does?

As far as the topic of the thread goes, I was a 20 year CU member and had a similar experience when trying to buy a tractor. Closing the sale at the dealer, the wife wanted to call the bank where we had our mortgage but I insisted on calling the CU. I "knew" that I could do the deal over the phone, as I had done so several times over the years. They eventually transferred me to the manager who told me they couldn't do it since there wasn't a title. My wife called the bank, spoke for about 30 seconds and handed the phone to the dealer. After a few seconds the dealer hung up and said they would deliver the tractor "today". We left there, went to the bank and signed the papers that were waiting for us. Less than 5 minutes. As we pulled into the driveway the tractor was being unloaded.

Banks and Credit Unions historically have operated under different rules but that line has become blurred. Prior to 20 or 25 years ago you had to be a member (or a dependent) to open an account at a CU. It was typically only for employees. At some point the rules changed and CU's started extending membership to non-employees. Since then I have seen very little difference between dealing with a bank or a credit union.

 

[WADFL]

The similar unit for an RK55 is a TYM 554.
Why not explain to the loan officer that the tractor is a rebranded TYM 554?

Look on RKTractors.com to find the following verbiage:
"RK Tractors are made in South Korea by TYM, manufacturers of compact tractors for leading U.S. tractor brands, and feature best-in-class Yanmar (19-55HP) and Deutz (74HP) diesel engines. Final assembly takes place in Waverly, OH, and Williston, FL. RK by King Kutter 3-Pt. equipment is made by King Kutter in Winfield AL, and tires & wheels are made by midwest-based and industry leader Titan International. RK provides full service at every RK Tractor location, zero down payment financing for up to 84 months, tractor delivery (for a fee) and an industry leading 8-year limited powertrain (19-55HP) and 5-year limited powertrain (74HP) warranty. We can offer fully-loaded, premium tractors at very low prices because we buy directly from the manufacturer. We can proudly say that you will not find a better value in sub-compact, compact or utility tractors anywhere!"

 

[RickB]

It's not to difficult to understand how dealing with a local credit union differs from dealing with Deere, Kubota or any other manufacturer's credit source if you actually think about it. None of those entities have a branch in your town or local area.
The OP obviously has a desire to work with his local credit source of choice, in this case a CU. It could easily be a bank with a nearby branch. That could change if the hassle outweighs the loyalty he feels.
Beating him up over his convictions is small minded.

 

[IndyJay]

I agree in principle, my comments were more related to CU vs bank. Still interested in hearing how getting a loan through either greatly benefits the locals any more than going through dealership financing. The "money" doesn't stay local in either case. It is a digital transaction in a computer far away from the local branch. How many people walk into their local branch to make a payment on anything? Even when paying by check the address it goes to is not local. I understand the sentiment, just not seeing how it actually does anything besides "feels". Please explain it so that I can understand it, I am not a financier.

 

[RickB]

No different than any other retail business. Volume of business supports income, income pays wages and benefits to employees, fixed expenses, variable expenses and excess which is reinvested or taken out as profit.
If the OP's CU (or bank) has fewer deposits and writes fewer loans the business shrinks and dies.

 

[IndyJay]

No different than any other retail business. Volume of business supports income, income pays wages and benefits to employees, fixed expenses, variable expenses and excess which is reinvested or taken out as profit.
If the OP's CU (or bank) has fewer deposits and writes fewer loans the business shrinks and dies.

So now we are talking about Bank accounts. Yes, I agree that you should do your checking and savings at a local bank. The volume in deposits and withdrawals does keep people gainfully employed. How much "volume in business" is there with a monthly payment that goes to a different zip code or made electronically over the internet as many people do? The deposits to make those electronic payments still have to be made, unless you have have direct deposit like I have for the past 15 - 20 years. The processing of loans is much different than it was even 5-10 years ago. Things change and banks seem to have adapted well to the changes.

 

[RickB]

I was referring to loan volume primarily. Now you're just being argumentative. I'm out.

 

[Chewwy]

. . .

they are telling me I need to have the brand new tractor appraised by someone other than the dealership I am buying it from. I am not sure how to go about this. . .

Seems pretty simple. Get a price quote from another RK Tractor dealer. The RK Tractor website list a s - - - pot full of them in OH.

 

[IndyJay]

I was referring to loan volume primarily. Now you're just being argumentative. I'm out.

Sorry if you take it that way, I was not trying to be argumentative, I was replying to the comment you made on my post, about banks providing jobs. I thought of it as a friendly debate. Quite simply, I don't think that tractor loans come anywhere close to where home mortgages, auto loans and personal loans make profit for the bank. The OP and I both have given examples where our CU (or bank?) have been unable, unwilling, or have at least made it difficult to write a loan for a new tractor. It seems likely that this has contributed to tractor manufacturers making it easier for consumers to get these loans for their own business interest, that is to make it easier for customers to buy their tractors. That is a good thing. In fact, the competition among the tractor manufacturers has gotten to the point where they offer either low or zero interest for their customers. Hard to compete with "free". There is a similar trend with cars, furniture and appliances, and all sorts of other major purchases. The banks still hold their niche in their core business, mortgage and personal loans.