Kubota New Pricing

[ovrszd]

I wanted to know if Kubota is bearing some of the financing costs, so I did the amortization calc. There are calculators on line that do it.

On a 50k tractor, with an 84 month loan at 6%, the interest comes out to around 11, 350. That same tractor at 84 months and 3% is around 5,500. The difference is around 5,850.

Kubota just increased the tractor price around the same price as the marginal increase in interest, around 5-6K.

So people think their getting 0%, but kubota is just increasing the price to cover the added interest expense. At the same time, they are not decreasing the price to reflect a true cash only purchase. So even people paying cash, are subsidizing the credit customer and kubota is not.

Well stated.

 

[jyoutz]

I wanted to know if Kubota is bearing some of the financing costs, so I did the amortization calc. There are calculators on line that do it.

On a 50k tractor, with an 84 month loan at 6%, the interest comes out to around 11, 350. That same tractor at 84 months and 3% is around 5,500. The difference is around 5,850.

Kubota just increased the tractor price around the same price as the marginal increase in interest, around 5-6K.

So people think they’re getting 0%, but kubota is just increasing the price to cover the added interest expense. At the same time, they are not decreasing the price to reflect a true cash only purchase. So even people paying cash, are subsidizing the credit customer and kubota is not.

And this is why I chose the 0% for my recent purchase. I have better uses for cash to earn a little interest.

 

[Gator6x4]

And this is why I chose the 0% for my recent purchase. I have better uses for cash to earn a little interest.

I don't think you could make enough on investment interest to offset and exceeded the interest amount included in the loan.

Now one way to make money would be to pay cash and pay yourself monthly payments and include the 6% increase in price added to the sale price to give you the 0% loan.

 

[Snobdds]

I don't think you could make enough on investment interest to offset and exceeded the interest amount included in the loan.

Now one way to make money would be to pay cash and pay yourself monthly payments and include the 6% increase in price added to the sale price to give you the 0% loan.

Well this was not true when interest rates were 3%. Now that interest rates are 6%+...the rule of 72 comes into play.

I wish someone that just bought a tractor would give us what Kubota quoted for a cash price and what Kubota quoted for the "0%" interest price. Then I could tell you exactly if selling investments to fund a tractor is better/not better than doing Kubota's 0% interest play.

 

[Paystar]

So again I priced out a new Grand L3560 with R4's and the LA805 Loader.
$64,601.77.........$73,000 with tax.

I was really bummed out because I found a Massey Ferguson 1635L with loader and only 900 hours. It looked like brand new inside and out for $39,000 Canadian but it was sold and gone and someone at the dealer never took it out of their system.
So I priced a new 1835M and it came in at $13,000 less than the Kubota.

 

[Rdrcr]

^^^^
I really like the MF 1835. Almost bought one.

Mike

 

[check]

Well, it doesn’t look like the prices on the small tractors and gone down at all. I bought my Kubota BX 25 in the fall of 2008 for $18,000. I just priced the newer model, the BX 23S online, and it’s $35,000! No way I would buy it for that.

 

[Goose1776]

Well this was not true when interest rates were 3%. Now that interest rates are 6%+...the rule of 72 comes into play.

I wish someone that just bought a tractor would give us what Kubota quoted for a cash price and what Kubota quoted for the "0%" interest price. Then I could tell you exactly if selling investments to fund a tractor is better/not better than doing Kubota's 0% interest play.

I just bought a BH77 backhoe for $10k
Price was the same regardless of cash or financing.
There was a $300 financing fee
But interest was 0%
I financed it and
Used my cash to buy a used RTV.

 

[ovrszd]

For cash buyers this 0% finance gimmick is horrible. Price is inflated to cover finance cost so everyone is paying for it.

If that cash buyer finances and invests their cash with a return they'll get back a little. But in the end everyone pays.

Another point. If I have any debt, every penny I spend is borrowed and costs me finance fees.

 

[Snobdds]

I just bought a BH77 backhoe for $10k
Price was the same regardless of cash or financing.
There was a $300 financing fee
But interest was 0%
I financed it and
Used my cash to buy a used RTV.

I unfortunately can't do the math on this one since the price was the same and the financing is a separate fee not amortized over "x" number of years.