Haggling with Mahindra dealers

[ktoom]

This is my first New tractor that I've ever purchased from a dealer. This may be a dumb question, but do these dealers have wiggle room to bargain when using Mahindra financing? Or do they not have that option unless your paying cash? Ive called a few dealers, multiple times and got a few different price quotes each time.... some quotes went up and some went down.

Just when I was going to commit to one dealer, I found another out of state dealer that wasn't too far away. I called him and he was $1000 lower on his price's for tractor and FEL and TLB. The prices seem to be all over the place. Whats the story guys???

 

[arrow]

The "story" is everyone is paying Mahindra the same price for a given tractor. It's retail pricing however has most to do with the dealer. It's secondary pricing has to do with the financing as you are finding out. I did better in the long run with 3.84% financing than I did at 0% when I bought mine. What the dealers overhead is for his place, if some stock was purchased with "prior pricing" before any increases and the amount of product turnaround eventually govern public pricing for any particular dealer. I don't know if Mahindra throws additional monies to a dealer if sales are high or if there are "quotas" like with auto sales but I do know my dealer was given a free trip to Japan last fall and he and his co-owner went to the Mitsu factory where they build some of their tractors. He said the place was like a "hospital" that built tractors.

 

[wolftree]

Tractor dealers haggle on price just like car dealers. One dealer may have a tractor left over with a factory deal and can offer a lower price. Just make sure you are comparing the exact same tractor/equipment with each dealer.

Find out what savings programs Mahindra can offer you and make certain to figure that into each dealer offers it to you.

 

[ktoom]

The biggest thing if found out was that Mahindra finance requires that you pay insurance, thats incorporated into your loan, incase anything happens to you and can't pay the loan. Well that adds $1200 to the tractor price. They take out roughly $15 a month to pay this.... But you still have to pay for the whole thing up front.

This annoys me that none of the dealers mentioned this to me front the get go.

 

[AchingBack]

The biggest thing if found out was that Mahindra finance requires that you pay insurance, thats incorporated into your loan, incase anything happens to you and can't pay the loan. Well that adds $1200 to the tractor price. They take out roughly $15 a month to pay this.... But you still have to pay for the whole thing up front.

This annoys me that none of the dealers mentioned this to me front the get go.

You can always try to get a loan and insurance through another source. The insurance I got when I bought my tractor on a 36 month contract cost me 226 dollars over the life of the contract.

 

[LAWALLSTRACTOR]

The biggest thing if found out was that Mahindra finance requires that you pay insurance, thats incorporated into your loan, incase anything happens to you and can't pay the loan. Well that adds $1200 to the tractor price. They take out roughly $15 a month to pay this.... But you still have to pay for the whole thing up front.

This annoys me that none of the dealers mentioned this to me front the get go.

The insurance is called physical damage insurance. It is not in case something happens to you, it is the damage to the tractor and is protecting the tractor value, (loan companies interest) just like when you buy a new car the loan company requires you to carry collision coverage on the car (to protect thier interest). I try to mention this during the negotiations, but can't say I haven't forgotten to, and also I have mentioned it and either the customer forgot, or didn't hear me tell them in the first place. There is a lot going through everybodies mind in the middle of the negotiations.

 

[oldpilgrim]

I went to 3 mahindra dealerd and emailed 3 other for pricing. It's amazing how close to each other the pricining was. None would budget much, if at all.

The only concession in dealing was 'ill take 500 off if you pick it up.'

 

[jel1988]

I saved about 10% and made the dealer throw in a free thumb to close the deal. I purchased a 2012 unit in 2013 brand new dealer stock identical to the 2013 same warranty only difference, it sat in the show room for a year.
PS Don't mention how you intend to pay until your ready to sign, I took 72 months interest free, why spend your cash thats earning when they'll give you theirs for free. I know nothings free, but they just take it from their advertising budget.

 

[DavesTractor]

PS Don't mention how you intend to pay until your ready to sign, I took 72 months interest free, why spend your cash thats earning when they'll give you theirs for free. I know nothings free, but they just take it from their advertising budget.

The dealer actually pays for most of the 0% costs. It comes right out of the proceeds from the loan, he gets shorted that amount. It may still be wise to use Mahindra's money instead of yours, but there is no real strategy that changes the numbers. Cash or standard rate gives you the lowest price. As the interest rate gets lower and approaches or hits zero, discounts go away and the unit price effectively goes up.

Some dealers price all the units at the 0% for 84 month price, but they risk people not listening to the discounts available. Those folks will think that dealer is ridiculously high, at least initially. When they hear that dealer is $19,500 for a rig and the other dealer is $17,500 for the same rig, they may not stay on the lot long enough to hear about the cash price.

Some dealers price at the cash price, so they have low pricing. But they risk people getting upset when asking for 0% because the have to factor in that cost and the price then changes upward substantially. When the customer hears that the $17,500 price goes up to $19,500 at 0% for 84 months, he is upset. I'm just making up this $2000 differential as an example, it's an arbitrary number.

Generally people are OK with losing a discount to get 0%, but they hate to pay extra for it. Yet it is the same thing. It is difficult for a dealer to maneuver, but less so if the customer states upfront how he wishes to purchase. And of course it is easier for the customer if the dealer has the price differences at his fingertips as well. Basically, there is some discussion that needs to happen. It would be simpler if there was just one price, but not everyone is at the same place in life, we need options, and options complicate things!

I will give this hint though, the 0% "up charge" factors in the financing cost for a typical sale, perhaps tractor, loader and box scraper. If you also buy a backhoe and/or otherwise load up the rig, the 0% surcharge does not go up even a penny. So even if you are prepared to pay cash, you might want to crunch the numbers on the 0% deal if you are buying a big package.

 

[wolftree]

When I purchased my tractor, I had the Dealer quote me all of my options in financing before I chose what worked best for me. I reccomend exploring all options.

 

[SulleyBear]

""I will give this hint though, the 0% "up charge" factors in the financing cost for a typical sale, perhaps tractor, loader and box scraper. If you also buy a backhoe and/or otherwise load up the rig, the 0% surcharge does not go up even a penny. So even if you are prepared to pay cash, you might want to crunch the numbers on the 0% deal if you are buying a big package"".

Dave,
Thank you for posting what I found to be a very helpful comment. It is important to know the FACTS about the dealership side of the transaction instead of assuming from rumors how the actual finance packages are priced. Could you clarify, perhaps with an example, of what the "up charge factors" are on a typical tractor, FEL purchase? I am not asking for actual numbers, but just an example of how the pricing is structured. I am seriously looking at a new tractor and several implements and I want to understand exactly the point you are making.

Recently, some brands has been running a special where they have 0% for 72 months or maybe it is 0% for 60 months and then a small rate, like 1.99% or similar if the loan is extended to 72 months. But they are also offering $1,000 off the purchase of two or more implements when purchased with the tractor. Since you mentioned the 0% surcharge "not increasing a penny" and I am looking at buying MMM, FEL, rear brush hog, front snowplow and quick attach, and possibly a cab and other 3 point hitch attachments, I would like to be sure I am clear on the pricing components.

I was planning on paying cash, but will consider the various financing if it does not change the purchase price. As we know, there really is "no free lunch", it's just a matter of who ultimately is picking up the tab. It's truly a bad deal for all if no one profits. I appreciate your insight provided in the above post and also in any additional information you can provide. Thanks...

 

[DavesTractor]

SulleyBear,

I can keep it general. It would take a huge spreadsheet to list all of the possibilities.

From a finance point of view, this is all about numbers. A tractor that typically sells as a tractor/loader package for $18k will have buy-downs or discounts of about half of what a $36k tractor would offer. Some big models might have a $4500 discount, or delta, between cash and 0/84. A small tractor might be closer to $2000 worth of discounts if you go from 0/84 to cash.

You can generally get cash or standard rate at the same cost, since the standard rate is not subsidized by anyone, it comes along truly at no charge.

You then go to a lower rate, maybe 2.99 or 3.99 and give up $500 +/-, maybe twice that on large tractors. If you then want to go 0%, the cost all depends on the term length. 0/36 costs very little and is good for the cash buyer that can handle a large payment and just prefers to use someone else's money for a few years. 0/84 on the other hand, is the most expensive by way of lost discounts or up charges....however your dealer sells it.

But to the meat of your question: Let's say you bought a $18000 tractor/loader and wanted a finance rate that caused you to pay $1000 more then the best cash price. So now you pay $19,000. Then you load it up with a Mahindra backhoe for $6500, a Mahindra front snow blower package for $5k, and various Mahindra mowers and box scraper, etc. for another $4500. Now we are at roughly $30k. Your buy down does not change from the $1000 already mentioned, yet you have bought nearly twice the tractor package. In the past Mahindra used a percentage of what was financed as a buy down, but currently these are tied to models, not $$. That can be a good deal for you with a large package. On average it works for Mahindra, but big package guys benefit the most. Please note that if you buy non-Mahindra attachments, the deal is different. Mahindra isn't interested in helping a dealer sell a Woods backhoe or a Landpride box scraper. Understandably.

From a dealers perspective, we wish you all had a card you handed us. On it you would write things like "I care most about a low down payment", or "I have $10k down payment, and I can make large monthly payments, I care most about not paying much interest and I'll take short terms", or "I've got nothing down and I can spend $250/month, I don't care if it is for 20 years...just get me a tractor!" Or "I'm a cash buyer, I don't need your financing, give me the very best price and do it quick because I'm ready to load". We have a lot of options, and once we narrow the possible ways of purchase, we can tell you exactly the best way to go and the best price. But you need to know a certain amount from us in order to tell us how you wish to purchase. There is a little dance that occurs at the beginning of a sale as we get in step with one another. It is generally not a dealer trying to mess with you. He is just trying to narrow the options.

I did not proof read the above, too little time. Errors are for your entertainment. I hope this was helpful.

 

[SulleyBear]

SulleyBear,

From a dealers perspective, we wish you all had a card you handed us. On it you would write things like "I care most about a low down payment", or "I have $10k down payment, and I can make large monthly payments, I care most about not paying much interest and I'll take short terms", or "I've got nothing down and I can spend $250/month, I don't care if it is for 20 years...just get me a tractor!" Or "I'm a cash buyer, I don't need your financing, give me the very best price and do it quick because I'm ready to load". We have a lot of options, and once we narrow the possible ways of purchase, we can tell you exactly the best way to go and the best price. But you need to know a certain amount from us in order to tell us how you wish to purchase. There is a little dance that occurs at the beginning of a sale as we get in step with one another. It is generally not a dealer trying to mess with you. He is just trying to narrow the options.

I did not proof read the above, too little time. Errors are for your entertainment. I hope this was helpful.

Dave,
Thank you for an EXCELLENT answer to my question. This is precisely the answer I was seeking. I genuinely appreciate your honest answers and the fact that all of your posts which I have read include valuable information.

As someone who has been self employed for more than 35 years, I recognize that your posts are from real world experience and you display a manner of dealing with people which speaks to honesty and integrity. The detail which you include in your answers demonstrates the depth of experience and your desire to disclose the good and the bad, which is really important in any transaction.

Some customers are indifferent to the dealers financial result in a vehicle / tractor purchase transaction. But if nobody profits on the deal, the reality is that the dealers survival would ultimately be at risk, which is no good for any of the dealers customers, current transactions or previous.

While the "price" is the initial price paid at the time of the tractor purchase, it's true "cost" is determined over the years of ownership and the interaction with the dealer for all service, warranty repairs and parts purchases. Too often I see customers viewing the dealers in an adversarial manner, when it really doesn't need to be that way. Your posts do an excellent job of sharing the dealers view and how you work to build relationships with your customers which will only benefit everyone involved.

 

[KiwiBro]

The worst thing about Dave is he hasn't opened a dealership in New Zealand yet.

 

[DavesTractor]

The worst thing about Dave is he hasn't opened a dealership in New Zealand yet.

Thanks KiwiBro and SulleyBear!

 

[brain55]

The worst thing about Dave is he hasn't opened a dealership in New Zealand yet.

If Dave opens a dealership in New Zealand, I'd like the opportunity to come run his service department

Brian

 

[DavesTractor]

Wouldn't that be fun! I'm thinking Maui might be nice as well.

 

[KiwiBro]

If Dave opens a dealership in New Zealand, I'd like the opportunity to come run his service department

Brian

If it's happening in Maui, I'd like to send in my CV for the chief executive vice president of the stamps and envelopes licking division, in the air-conditioned office, if I get time off to go surfing every now and then.