Finally a topic I know a little something about. I work for one of the Big-3 captive finance companies and can share a bit about what to look for in a finance arrangement.
1) Down payments are very often a function of an applicant's credit worthiness. In other words, does the customer pay their bills? If so, many lenders will accept a small down payment, or even no down payment on a purchase like a car, truck, or tractor.
2) Indebtedness. A lot of folks are over-extended and one of the ways lenders often try and limit additional credit is to ask for larger down payments.
3) Your terms and conditions. If you are a good credit risk, ask the dealer's lender(s) for terms and conditions that suit you. Just because a lender may want 10%, 15%, or even 25% down, it may not be the right arrangement for you and if the dealer wants to make a sale he/she will work as the intermediary between you and the lender.
4) Shop around if a particular lender doesn't meet your needs. Most captive finance companies (Kubota, John Deere, New Holland) are very good and very competitive in the tractor market. They want to support your dealer and want to finance your purchase, often with 60, 72, and even 84 month finance plans. Your dealer knows how to work with these folks, and if terms just can't be worked out, I'll bet the dealer has another bank or lender or two available.
5) Large down payment requirements (20% or more) are somewhat "old school" thinking. Lenders used to believe (some still do) that a large down payment protected their interest in case of default or reposession. In today's world, a customer's credit worthiness should be the determining factor in whether or not a lender will write a loan.
Hope this helps. Negotiate the terms and conditions you want....the lender, not the dealer, will make the ultimate call on financing your purchase.
If you can afford the monthly note, and want to keep your cash for other purposes, work on a low or no down payment deal with extended terms (60 months or more). If you can really afford the monthly note, do a low/no down deal for 24 to 36 months......quickest way to ownership with lower interest charges. Always remember though, interest charges do apply and that my friend is how we manage to make a buck.
Bob Pence
