To finance or not to finance ...

[RSR]

Tractor costs go up year after year.... add in Trump's tariffs on steal and the potential for cost increase is very high.

With 0% interest, you lock in the cost at today's price..... and you get to start enjoying the tractor now.

I wonder how much the cost of steel actually affects tractor price. I'm sure dealers will use it to try to squeeze a little more profit.

My way of thinking about it, which is admittedly probably naive, is that current prices for steel are about $850/ton. So a 2 ton tractor will have roughly $1700 worth of steel in it. If a 15% tariff is tacked on, that means tractor price should only go up about $255 dollars. That's not that much, and is a very small portion of the overall tractor cost.

 

[chryon]

I wonder how much the cost of steel actually affects tractor price. I'm sure dealers will use it to try to squeeze a little more profit.

My way of thinking about it, which is admittedly probably naive, is that current prices for steel are about $850/ton. So a 2 ton tractor will have roughly $1700 worth of steel in it. If a 15% tariff is tacked on, that means tractor price should only go up about $255 dollars. That's not that much, and is a very small portion of the overall tractor cost.

It's not just the steal in the tractor.... it's the attachments.... it's also the steal in the truck the freight company used to ship the tractor.

 

[Ford850]

It's not just steel. There are nearly 6000 product categories on the list: US-China Tariff List 9.17.18 | Food & Wine | Foods

 

[Atchuuu]

I skipped the last couple of pages so if this has already been mentioned please disregard -

Kubota does in fact offer a cash discount. This varies by the model and current promotions. At this time the Grand Series has a $700.00 cash, or other, rebate. When I looked earlier this year at a L2501 I was told by the dealer that I would get a cash discount even if I went to the credit union. I always assumed the price was negotiable anyways based on the differences in advertised price from multiple Kubota dealers.

KUBOTA GRAND L60 SERIES - NEW TRACTOR PURCHASE SPECIAL OFFERS
Up to 0% A.P.R. for 60 Months with 0% Down on your new Grand L60 Series Tractor!
(offer ends 12/31/2018)

0% A.P.R. for 60 Months with 0% Down1 OR
0.99% A.P.R. for 72 Months with 0% Down1 OR
1.99% A.P.R. for 84 Months with 0% Down1
OR

$700 Instant Rebate for Cash or Standard Rate Financing2

 

[Atchuuu]

B Series rebates

KUBOTA B SERIES - NEW TRACTOR PURCHASE SPECIAL OFFERS
Up to 0% A.P.R. for 60 Months with 0% Down on your new B Series Tractor!
(offer ends 12/31/2018)

0% A.P.R. for 60 Months with 0% Down1 OR
0.99% A.P.R. for 72 Months with 0% Down1 OR
1.99% A.P.R. for 84 Months with 0% Down1 OR
OR

Model B2650 only - $400 Instant Rebate for Cash or Standard Rate Financing3
Model B3350 only - $900 Instant Rebate for Cash or Standard Rate Financing3

 

[Atchuuu]

L Series

KUBOTA L01 SERIES - NEW TRACTOR PURCHASE SPECIAL OFFERS
Up to 0% A.P.R. for 60 Months on your new L01 Series Tractor!
(offer ends 12/31/2018)

0% A.P.R. for 60 Months with 0% Down1 OR
0.99% A.P.R. for 72 Months with 0% Down1 OR
1.99% A.P.R. for 84 Months with 0% Down1
OR

$500 Instant Rebate for Cash or Standard Rate Financing2

 

[prof fate]

Today you NEED a reliable car. Andwhen they break it's difficult to fix at home - diagnostics and special tools and such.

You can buy a new car and make payments - and have a warranty, loaner car most of the time - OR - buy a $4k car (no more $500 and $1000 ones...alas) and spend time/money/hassle on keeping it running. Maybe a good idea to have a second, backup vehicle - so now the savings drop adn the hassle factor goes up.

I put big money down on my last car - about half. Nice ot have a paid off car that has 65k miles on it. So far so good on it, only minor stuff I could handle.
The truck ..also paid off but 13 years old, over 100k...issues now and then. Always in the back of my mind...will it get me there and back? But I can't do like some and spend $50k on a new truck.

As for borrowing - it's 'renting money' - you buy new, cash or financed, you can sell it - and lose money either way.

The what, $100/year or so interest charge is the 'rent' on the $20k loan. Use their money, not my money - and get the tractor NOW, not years from now. Well worth the $100 'extra' the interest is gonna be.

AND it helps my credit - which lowers my car insurance, home owners insurance, a higher credit rating helps you get a job, life insurance and a lot more these days.

I don稚 know how that痴 possible in today痴 time. Good luck paying for a house in cash without being homeless for 20 years. I drive a paid for vehicle but if I wasn稚 mechanically inclined I壇 rather send money to the dealership every month than the repair shop every month. At least the dealership doesn稚 make you late to work or worse. Now outside of a house, vehicle or piece of equipment you actually need I don稚 think financing is a good idea. I don稚 think taking advantage zero percent financing that actually pretty close to that is bad either.

 

[rScotty]

What we did years ago was to buy an old-fashioned car.... in this case a basic 1/2 ton 1970 Chevy PU with a stick shift. It was our backup for anything needing wheels. Too uncomfortable for vacation trips, but so reliable that we were never without transportation. It was so simple mechanically that if anything ever did go wrong just about anyone could fix it. Usually inexpensively, too.

Having that old pickup to fall back on gave us automotive financial freedom. We didn't have to make payments on a new car just to get reliability for work and school and errands. We could wait to find a good deal on used daily driver cars - and we weren't tied to having to fix them if they turned out to be lemons.

When I retired we gave that PU to a young friend. It's doing the same good for their family that it did for ours.
rScotty

 

[Diggin It]

Skipping several pages but catching some of the recaps .......

I did pay for this house and property in cash. I own it outright. Used the profits from selling another house in another state that I had a mortgage on. Sold that one for nearly double the mortgage balance. Made extra principle payments for several years to bring the balance down and pay less interest overall.

I've bought all my cars 4-5 years old after they've lost half their value. I use local bank financing and pay them off a year or two early if possible. I keep them until they die and go to the junk yard. I currently have a '95 and a '96 that I've had for nearly 15 years. Both still running fine but with some repair costs as expected, but almost certainly far less than what the interest on a new car loan would have been. And Ive seen a lot of horror stories about repair costs on new cars that were not covered by the warranties.

I buy most everything and pay most of my monthly utility bills with CCs that pay bonus points or dollars, then pay them off in full each month. I haven't paid a penny in CC interest in many, many years, and I've received considerable value in those bonus points. In effect, they're paying me to use their cards.

I haven't owed anybody anything in over 10 years until this tractor loan. I explained earlier how this is being paid in a way that I won't even see or notice the payments and how they won't affect my monthly income at all.

 

[RSR]

Today you NEED a reliable car. Andwhen they break it's difficult to fix at home - diagnostics and special tools and such.

You can buy a new car and make payments - and have a warranty, loaner car most of the time - OR - buy a $4k car (no more $500 and $1000 ones...alas) and spend time/money/hassle on keeping it running. Maybe a good idea to have a second, backup vehicle - so now the savings drop adn the hassle factor goes up.

I put big money down on my last car - about half. Nice ot have a paid off car that has 65k miles on it. So far so good on it, only minor stuff I could handle.
The truck ..also paid off but 13 years old, over 100k...issues now and then. Always in the back of my mind...will it get me there and back? But I can't do like some and spend $50k on a new truck.

As for borrowing - it's 'renting money' - you buy new, cash or financed, you can sell it - and lose money either way.

The what, $100/year or so interest charge is the 'rent' on the $20k loan. Use their money, not my money - and get the tractor NOW, not years from now. Well worth the $100 'extra' the interest is gonna be.

AND it helps my credit - which lowers my car insurance, home owners insurance, a higher credit rating helps you get a job, life insurance and a lot more these days.

The comment,

"The what, $100/year or so interest charge is the 'rent' on the $20k loan. Use their money, not my money - and get the tractor NOW, not years from now. Well worth the $100 'extra' the interest is gonna be."

is my main point in this thread.

If you actually run hard numbers (see my first post) the cost of financing is a staggering high amount. It can amount to $1,000's of dollars per year in finance charges, lost investment opportunity (paying interest as opposed to earning it), etc. not the ~$100/year as you are stating.

Now, having said that, my analysis also ignores intangibles such as the satisfaction of using the tractor, ability to get projects done, etc. As many have pointed out, that is not an insignificant consideration.

The point at which everything becomes an acceptable "cost" will clearly be different for each person, and is a largely personal decision with many factors to consider. Again, with many great examples in this thread.

However, I think the true financial impact on the wallet is often overlooked, or even downplayed, without developing a complete picture of the financial ramifications.

That is, it's easy to "buy into" (pun intended ) the salesman speak of "hey, this nicer tractor is only an extra $50/month on the loan," which is really just a clever sales trick to obfuscate the true cost.