Kubota still offering 0 percent financing

[SDT]

...and rebates / cash back on certain models.

Yes, but you must buy it down.

Kind of like paying points when financing real estate.

 

[Snobdds]

I'm convinced there are people out there that really think 0% means they give you the truck/tractor for no financing costs.

America is dumb.

 

[Torvy]

I'm convinced there are people out there that really think 0% means they give you the truck/tractor for no financing costs.

America is dumb.

To be fair, it does happen. I've done it multiple times. People are just too focused on the individual transactions and big dealerships and big lenders do not and cannot think that way. It is the aggregate that matters.

As a lender, I can give you a free deal to allow me to make much more money off of a guy who has a bad history.

 

[rScotty]

0 percent Captive lending be it from GM, Ford, Chrysler, Toyota, Harley, Kubota, John Deere, Mahindra, etc for a motorcycle, car, truck or tractor is all the same.

Sorry, but this was clearly written by someone who has never worked in auto finance.

0% is mostly a way for lenders, including captives, to appease regulators and make more money available to lend to others. People outside the business think in terms of one deal. For every 0% deal, there is someone (or 9) with less than perfect credit on whom they make bank.

Most of the captives sell your loan to banks and keep the bump (up to 2% they can wiggle your rate). The dealer already knows the options he has from 3-5 lenders before you sign.

Except the part about many lenders, all personal loans work like this. The only way people with bad credit are able to get any loans is that lenders loan money to people with great credit. Often, those people don't need a loan, so 0% gets them to finance which helps the risk portfolio and the regulators stay happy.

Both are interesting perspectives.

 

[Snobdds]

To be fair, it does happen. I've done it multiple times. People are just too focused on the individual transactions and big dealerships and big lenders do not and cannot think that way. It is the aggregate that matters.

As a lender, I can give you a free deal to allow me to make much more money off of a guy who has a bad history.

You're getting the players mixed up. A lender can not loan out money at 0% interest because they won't be a lender for long. A manufacture can absorb the loss of 0% financing as they can raise the price of a vehicle to buy down the back end interest. That is why zero percent loans on the same car will have a higher purchase price than one with an interest payment attached.

So how do you avoid the scam, easy, no vehicle's price should be contingent on the interest rate a person pays. It does not matter what the interest rate is on the actual price of a vehicle. If a dealer insists you only qualify if you pay a certain price, you're getting scammed.

 

[Torvy]

L8r

You're getting the players mixed up. A lender can not loan out money at 0% interest because they won't be a lender for long. A manufacture can absorb the loss of 0% financing as they can raise the price of a vehicle to buy down the back end interest. That is why zero percent loans on the same car will have a higher purchase price than one with an interest payment attached.

Not at all. Lenders can and do it all the time. I spent most of my adult life in financial services with two of Americas biggest banks. (10 of that was specifically in auto finance). Lenders are not concerned with individual loan profits. It is all about the aggregate risk portfolio. Regulations are in place that require lenders to keep the risk numbers in check. Of course, they also want to make sure lending is 'fair', so banks have to combine high and low risk loans in the same tranche. To that end, lender must attract enough high credit customers to balance their portfolio... Or sell loans to other banks who do a better job. When rates are as low as they have been for most of the last 20 years, banks must offer 0% to attract enough of those customers. As rates rise, that will change a bit, but it will not go away. People with good credit tend to make good decisions with money, hence, the good credit. They tend to be more likely to hold off or pay cash when credit is tight.

Things that affect your rates: Credit (not just FICO), make and model, LTV (loan to value ratio), trade-in, down payment, term length, repayment terms (conventional, ARM, balloon, etc.), and , of course, the current Prime Rate. Dealerships know they have to keep the loan amount down for LTV. They will play with down payments or trade values to make sure they are not over LTV. The LTV varies on credit, too. Good credit will let you go anywhere from 100-130% (more in some cases). Bad credit may require 80% (meaning the customer has to have 20% equity from the get-go). So, people with good credit will have dealers try to upsell them more on add-ons, like extended warranty, rust protection, etc. Cash buyers have no bank limiting LTV, so dealers will jack up as much as they can get people to pay. There are some great dealers out there, but I spent a good chunk of my career investigating the bad ones.

Smaller dealers and smaller lenders will be less likely/able to offer 0%.

 

[notaz3]

Just took delivery of my tractor with 0% for 84 months. Price was agreed upon before financing was even discussed.
Dealer doesn't care if it's cash or manufacture financed their price is the same.

 

[jyoutz]

Again, what do car deals have to do with Kubota tractor deals?... NOTHING.
2 entirely different things. Far as cars go, not in the market for one anyway and when I do buy a car or truck, I only buy off lease and pay cash.

Off lease is becoming less common because leasing is less common today. Excess mileage charges greatly increases the cost of a lease and people are wising up about that added cost.

 

[rScotty]

Just took delivery of my tractor with 0% for 84 months. Price was agreed upon before financing was even discussed.
Dealer doesn't care if it's cash or manufacture financed their price is the same.

Good for you. That's the same thing we did. Agreed on price & I was literally reaching for my checkbook when he said, "Cash.... or 0% credit?" It's been great.
Most probably, it's a case of some dealers are & some aren't.
rScotty

 

[Hay Dude]

Just took delivery of my tractor with 0% for 84 months. Price was agreed upon before financing was even discussed.
Dealer doesn't care if it's cash or manufacture financed their price is the same.

What if the dealers salesmen have monthly meetings and they all agree to price their tractors at a preset price that assumes the “0% financing” offer will be used? This is the oldest sales trick in the book.

Look at it this way: it’s obvious that if the manufacturer is offering “0% percent financing for 84 months” that 99% of buyers that walk in the door would opt for it!
After all, who wouldn’t opt for 84 months of “0%” payments instead of writing out one huge check?
In the case that one odd-ball buyer says “yeah, I’ll skip the 84 months at 0% and write a check for $50,000”, they can either let him do it or negotiate a lower price if he looks like he will walk out the door.

I mean come on guys, you really think a manufacturer is going to just give away money on 0% financing versus writing a check for the entire amount?