New Tractor Sales Are Declining

[5030]

Never say, "never". Our Kubota was purchased at zero percent, so the program did exist. I have no knowledge about what kind of deals that other people do.
rScotty

So was the balance I financed with KCC on the new round bailer. There are no incurred finance charges on the remaining balance.

 

[5030]

My Kubota loan in December 2021 was also at 0%. But I believe that the company makes up for these loans by requiring KTAC insurance on financed units.

Was not a requirement on the round bailer and candidly, never came up. All I was required to do was provide a dec sheet copy that showed I had it insured for replacement cist and no, I don't insure anything with Kubota.

 

[Milo]

A reason Japanese companies like Kubota have offered "0%" interest is because Japan has been experiencing deflation, so it costs them nothing. Plus as mentioned they make some off their insurance and probably nick the dealer a little when they sell at 0%. Even now with our 10+% inflation Japan is only maybe 3%. But 3% inflation is a lot more than deflation so I imagine we'll see it change to "low interest" rather than "no interest".

 

[rScotty]

My Kubota loan in December 2021 was also at 0%. But I believe that the company makes up for these loans by requiring KTAC insurance on financed units.

Mine didn't. But my loan was over a decade before yours. Did KTAC insurance exist then?

Our existing rural insurance probably covered our equipment. I checked that. The dealer simply accepted my word on that; no more was said & no proof was necessary.

After we both arrived at a final price on the sales contract I offered to pay cash if he would throw in a shop manual or $100.

He said cash vs financing made no difference to him. If he faxed the signed 0% finance contract to Kubota Corporate the full purchase price would be in his bank account faster than he could drive to the bank and deposit my check.

So we financed it. Set up automatic payments at the bank. Cash price divided into 60 payments. It made depreciation calculations easier and didn't cost a penny on my end.

The question remains: Did I pay for the financing in the negotiated price? Maybe.... there's no way to tell. All I can say is that I am an old school guy and an ex dealer (motorcycles) myself, I was satisfied with the cash price, and cash vs financing costs were equal.

And I don't think we can draw any general conclusions about Kubota and 0% just because it apparently worked in one instance a decade ago. All deals are different.

rScotty

 

[Cahaba Valley Farm]

The question remains: Did I pay for the financing in the negotiated price? Maybe.... there's no way to tell. All I can say is that I am an old school guy and an ex dealer (motorcycles) myself, I was satisfied with the cash price, and cash vs financing costs were equal.

Scotty, dealer cost on a tractor is 23% below MSRP. Kubota's Equestrian discount is 20% off for cash buyers. So if you take a dealer like mine who only knocked off $700 (Manufacturer rebate from Kubota) from the MSRP price then there is the profit for the dealer. In my case he was going to make about $5200 more in profit if I financed versus just $780 in profit if I took the cash discount and that was just the tractor, no extras. So if you do the math he was charging me around 4% a year to finance that tractor for 60 months. I could of gone to any bank or credit Union and financed for that.

I'm surprised that the FTC hasn't cracked down on this industry for doing this as this is in my opinion a form of predatory lending.

 

[2manyrocks]

Used car dealers put customers into high interest subprime loans all the time........

 

[BleedingOrange]

Yes they do, but even thou it is legal, doesn,t make it ethically correct.
Then again, if you are that hard up to agree to those high rates, then maybe, just maybe, you shouldn,t be buying a vehicle in the first place.

 

[Milo]

You're right people with poor credit shouldn't be buying because they'll naturally be charged high interest. But many go out on a limb regardless and purchase new tractors, trucks, SxS's, motorcycles, etc. anyway.

 

[Fixastuff]

If they won't sell it cheaper for cash then it is 0%

 

[ovrszd]

If they won't sell it cheaper for cash then it is 0%

Why would they sell it cheaper for cash? They know you are bluffing.

 

[Fixastuff]

Why would they sell it cheaper for cash? They know you are bluffing.

Takeuchi sold me my excavator much cheaper for cash than their 0% offer. Kubota was the only company that wouldn't budge for cash. When I sold equipment the dealer paid the finance company a percentage of the sale for 0% and other low interest options.

 

[2manyrocks]

Yes they do, but even thou it is legal, doesn,t make it ethically correct.
Then again, if you are that hard up to agree to those high rates, then maybe, just maybe, you shouldn,t be buying a vehicle in the first place.

It's certainly not true for every buyer, but there is a group of car buyers who really only care about getting a car financed by someone somewhere because they know they can file chapter 13 and get the rate reduced to just a little over the prime rate. The subprime car lenders know this is going to happen to a certain degree, but make subprime loans anyway hoping that they collect enough high interest overall to be profitable even know they know they are going to get ripped by some buyers.

I doubt there are many subprime loans made for tractors.

I'd like to know just how many sales incentive programs Kubota actually offers. One dealer I spoke with in the Spring of 2022 hadn't heard of the equine discount, but rattled off four or five other discount programs I'd never heard of.

 

[ovrszd]

Takeuchi sold me my excavator much cheaper for cash than their 0% offer. Kubota was the only company that wouldn't budge for cash. When I sold equipment the dealer paid the finance company a percentage of the sale for 0% and other low interest options.

Good stuff. First I've heard of that. Gonna be hard for you to prove to the skeptics.

 

[Hay Dude]

I have almost always found writing a check to the dealer gets me a lower price than financing. You just have to know how negotiation works.
For me, financing comes down to whether or not I have the money to pay cash at the moment of need. If I need to replace a tractor, baler, trailer, truck, whatever it usually has to be done pretty fast since I’m using it to make a living.

I’m doing a tractor auction first week of November for another Case-IH Magnum. For once it’s not a pressure situation. Just an addition. Should be interesting.

 

[drumminj]

I think the finance charge is hidden in the required KTAC insurance. The cash discount isn’t very much

20% isn't very much? (equine discount). Not available with the 0% financing offer

 

[CloverKnollFarms]

Kubota doesn’t offer a 20% discount… last I looked. On an L series its more like a 3.5% discount

 

[buckeyefarmer]

I think the finance charge is hidden in the required KTAC insurance. The cash discount isn’t very much, so Kubota can’t hide too much in the purchase price. Unless the cash buyers are subsidizing the people who finance?

I had a kubota 0% interest loan without KTAC

 

[jyoutz]

20% isn't very much? (equine discount). Not available with the 0% financing offer

Go to the Kubota website and search equine discount. It’s all there on the site with cash discount prices for different classes of equipment. A few thousand dollars; nowhere near 20%.

 

[2manyrocks]

I believe the equine discount has changed. As I recall, it was 20% when I purchased my L2501 in April, 2022. It seems to have been replaced with a flat $1,000 customer instant rebate for cash buyers plus a flat equine discount of $1,000 for the L series. Equine Offer Landing Page.

 

[Cahaba Valley Farm]

Kubota doesn’t offer a 20% discount… last I looked. On an L series its more like a 3.5% discount

Wow, would you look at that. Kubota has now gotten rid of it's 20% equine discount...Dealers must have complained to Kubota about the discount cutting into their bottom line. This surprises me as this industry is headed for a very deep recession come next year.