Financing 101

[N80]

Great points from everyone. A few thoughts: A home equity loan can indeed be a psychologically uncomfortable thing, but you can frequently get better rates compared to an auto loan type arrangement. And debt is debt. So, from my standpoint (and comfort zone) I'll go with whichever type of loan will cost me the least over the life of the loan.

As for the cost of the 0% deals being part of the sticker price,well, it probably is but none of the dealers I dealt with made any concessions on the final sale price based one how you were planning to pay. So the price is the price.

As far as financing to get a used tractor, do the math or get someone to do it for you. If you have to take out an interest bearing loan to get the used tractor you have to add the total amount of interest you'll pay to the base price to see what your total outlay will be. For most of the like-new used tractors I looked at, the cost of interest brought the total cost near or above the price of a new one at 0% interest. Just do the math.

For me, a big down payment and 3 yr. 0% financing for the rest made the most sense. However, I was onlly looking at new or like-new machines. I was not up to buying a fixer-upper.

 

[unreconstructed]

Mike PA,

You are certainly correct about taking the interest free loan while investing one's capital elsewhere. My point is philosophical in nature. My wife and I agreed no more personal debt even if we have offsetting capital that could be put to work. We may have lost some income on the transaction, but net of tax not enough to bother me. I guess at 55 years old, its a mindset game. Whatever works. /forums/images/graemlins/smile.gif

 

[flwiii]

Good point N80:

When it gets to brass tacks, it's what the total cost will be.

 

[gamble77]

Keep in mind too gentlemen if you finance a tractor you have to provide insurance on the unit (which can start around $125 a year) plust "documentation fees" which range from $50-$150.

So say you but a tractor & loader at 0% for 36months. The selling price is $18,000.00. By the time you add insurance (say $185.00 a year for the tractor & FEL) and a filling fee your total sale price could be $18,705.00...so in reality your paying money to finance a tractor even if the rate is 0.

 

[N80]

The 'filing' fee ticked me off a little but I got such a good price that I didn't complain. As for insurance, well, you really ought to have it anyway for something that expensive. So I don't see that as inherent in the financing.

 

[flwiii]

My home owners policy covers the tractor sufficiently for the dealer as long as I only use the tractor at my residence. I opted to include the insurance to be safe as it was only $100 for the entire 36 month loan.

 

[unreconstructed]

Financing 101 continues!!

Just read an opinion piece where the auther called the new Fed chairman "Printing Press Ben". The writer thinks Ben will opt for lower short term interest rates. Good for buyers /forums/images/graemlins/smile.gifBad for the old folks living off savings /forums/images/graemlins/frown.gif

 

[PAB_OH]

I'm a buyer right now. I'm ok with it. LOL, /forums/images/graemlins/blush.gif

 

[Noodlearm]

</font><font color="blueclass=small">( The writer thinks Ben will opt for lower short term interest rates. )</font>

He actually stated once (this was when the markets were worried about deflation coming from China & India) that if we had to we would drop money from heli-coptors to fight deflation. Hence, he is thought of as "printing Press Ben". The last 2 Chairmen (Greenspan & Volker) both came in under similar circumstances and initially raised rates to "show" that they were tough on inflation and he may do the same (I certainly wish I knew). Either way, I don't think it should affect a persons decision to purchase a tractor now or later that much either way.