Kubota - Does 0% financing mean they have high markup

[timswi]

The prices of my Kubotas were settled before financing or paying cash was even discussed. I put 50% dopwn on both recent machines. The dealer didn't care whether I finaced it or not. Saved decent money on both compared to the local dealers. Just shop around.

 

[doall]

I did the same thing Tim. Worked my price, he brought up the payment amount. Then I asked for cash price, he told me that was the price any way I paid.

 

[bp fick]

Note: Finance Customer Rebates
When I bought a BX last year, there was no difference in price, cash vs. financing. However, this year, there was a *cash incentive program. One has to take into account the current program or incentive, as there are differences from time to time.

 

[rjkobbeman]

I guess if you put your money in a savings account you may have a point. But many people invest in other types of investment vehicles that earn far more than 0%. Some CDs are earning 2-3%. At 2.5% is $2,500 in 5 years. I have been getting over 10% a year in somewhat more risky (but not crazy risky) stocks and ETFs. Taking 20K out to pay for a tractor would lose me $4,500 over 5 years at even 7.5% a year earnings. It made no sense to me to get $1,000 discount as opposed to zero interest.

No... I TOTALLY get it. My question was really to the people who have the cash to buy their tractor outright and don't want to finance at 0%.

Me? I HAD to finance. Don't have that kind of money laying around. However, even if I did have the money, I still would finance at 0% and make my money earn ME interest.

I just don't understand why people want to pay cash, instead of finance at 0%, when the cash price and the finance price are the same.

Even if the cash price is $1k lower than the finance price, you can earn more than the $1k back in interest... even on a LOW-yield/"safe" investment.

 

[crazyal]

No... I TOTALLY get it. My question was really to the people who have the cash to buy their tractor outright and don't want to finance at 0%.

Me? I HAD to finance. Don't have that kind of money laying around. However, even if I did have the money, I still would finance at 0% and make my money earn ME interest.

I just don't understand why people want to pay cash, instead of finance at 0%, when the cash price and the finance price are the same.

Even if the cash price is $1k lower than the finance price, you can earn more than the $1k back in interest... even on a LOW-yield/"safe" investment.

It's not just the $1k CIR (customer instant refund) that I got but also the fact that I was able to use my current insurance which covers the machine but not to the level that Kubota requires at no extra cost. I didn't get an exact quote but that's about a $300 savings per year.

I know I've read posts here by people who said they paid cash so they could avoid sales tax, not that I would suggest doing it, but if you did that would easily save you more than almost any investment.

To some having an extra loan could hurt their credit. Even if you have the money in an account to pay it off banks don't assume you will.

As far as what others have said about investing it. If you are knowledgeable and have the time to watch your investments it makes sense however in a lot of cases people just aren't and if not careful could find that they lost money.

For some it could be temptation. Having that money sitting there could lead then to use a little here or there for something else.

Everybody is in a different boat. What's best doesn't always mean what saves (or makes) the best money.

 

[TripleR]

No... I TOTALLY get it. My question was really to the people who have the cash to buy their tractor outright and don't want to finance at 0%.

Me? I HAD to finance. Don't have that kind of money laying around. However, even if I did have the money, I still would finance at 0% and make my money earn ME interest.

I just don't understand why people want to pay cash, instead of finance at 0%, when the cash price and the finance price are the same.

Even if the cash price is $1k lower than the finance price, you can earn more than the $1k back in interest... even on a LOW-yield/"safe" investment.

For some of us older folks, it is just how we were raised and what we have experienced that make us more comfortable with pay as you go. Our financial portfolio is fairly well diversified, but even with a financial planner the returns fluctuate. I have friends who have had to delay retirement or return to work due to investments gone south. Young people have time to recover, I don't. Age and comfort levels vary.

When I was younger I financed most things out of necessity, so I sure know what that is like.

 

[Unregistered2013]

for my zero turn, i negotiated the price first, then my trade in and then financing --

-- they didn't care at all about the 0% or not -- not a stitch.

 

[Elcid76]

There is no such thing as 0% financing. Money has value over time, and a dollar now is worth more (at todays rate about 1.03) in a year, and with compounding it does begin to add up. The Present Worth (cash option price) for 20000 in 5 years @ 3% interest is about 17,250. Kubota knows what the present worth value is when they sell it, and they just compute the price based upon intest factors and term.
For me, it didn't matter. I didn't have 17k to offer in cash. But in fairness, I accepted the cost to have the machine. Everybody in the manufacturing chain has to make money for the system to work. My salesman was an old friend. I make enough money to afford the tractor. Even though I could have negotiated hard, I would have been reducing his (and the dealer's) return on investment. I bought it locally because I want that relationship to be healthy, and I know that at some time, I will need their help and business. Supporting local business is important, and the bottom line was that I was satisfied with the deal and the overall experience.

 

[ecoslik]

I believe the most important theme that runs through most of TBN is how much everyone likes their equipment and the work they do with it. Is it work or fun ... tools or toys ... we all seem to have similar opinions on this :thumbsup:

Japan's key interest rate has been 0.1% for 22 months straight, averaging 0.4% for about 12 months prior to that, and was 0% before that ... this has been the trend for nearly 14 years. Based on what I observe from Kubota's financials, the amount of the company owned by Japanese banks, and Japanese monetary policy, 0% financing has very little cost of capital for Kubota with only a small administrative cost as percentage of their total overhead/expenses. The money used for the 0% financing is approximately free to Kubota's largest shareholders who then make it essentially free to Kubota Credit Corp. Offering 0% financing doesn't cost Kubota much nor does it make them much ... big picture ... it doesn't cost them anything nor make them anything.

If I had not made up my mind to buy a (gently) used Kubota, the 0% financing would have been nearly impossible to pass on.

 

[Skyco]

I just don't understand why people want to pay cash, instead of finance at 0%, when the cash price and the finance price are the same.

I don't get that either...
When I bought mine I had the cash, when I found out about the 0% no way was I gonna give them my cash. I made a concerted effort to pay off ALL my debt the last 2 years and did it...except for the Kubota loan. Let it run its course, why not, cost me nothing extra and did make a tiny bit on the cash sitting in the checking account.

Lots of people just don't get it, years ago when I paid off my house some people I knew said that was stupid- that I lost my interest deduction. True, but- why save a little by spending a lot...yes I pay more taxes now but spend way less overall. Not a financial expert by amy means but I can do simple math.