To finance or not to finance ...

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There痴 a car dealership locally that is offering 10 year 1 million mile warranty. What痴 the catch? I致e never stopped in and asked for the fine print but I figured there had to be something.

2 things: first the warranty is pro-rated. Usually these things drop precipitously after 5 years. A million miles, a billion miles or a trillion miles all have the same inference. A "wow" factor to suck the uninformed in.. They already know statistically that anyone going a million miles in a vehicle within a 5 yr period is slim to none. Your 10 yr warranty will be worth next to nothing at ten years.

 

[RSR]

So your saying that today if I were to go buy a copy of my nearly $33,000 B2650 that I have to pick between a $400 rebate with some amount of interest or a 0% / 84 month finance option.

Now, I'm not the sharpest knife in the drawer... but 400/33000 is a 1.2% cash rebate. Assume that you take that and they finance you at 1.9%. Compounded. Holy crap batman! Talk about epic bad decisions!

Or you pay cash to save that awesome $400/1.2% that your so up in arms about. The financial loss if pulling $33,000 out of play for 84 months is going to be MASSIVE.

Anyone with a mild concept of finances would say that you have to take that 0% and forget about that $400 joke. Even if you have the $33,000 times 100 in your liquid portfolio, you would be an utter fool to take it out if play and apply it to this purchase.

That said, I see your $400 that you're showing. That did not exist in any way, shape or form in 2017 and quarter 1 of 2018 when I was making these choices. I looked at MF, Kioti, LS and Mahindra and all of them counted the rebate variance between cash deals and 0% deals in the thousands of dollars. Kubota was the only beacon of light calling to you with no penalty for choosing cash, 0% or whatever... prices at the bottom of the invoice were the same now matter how you decided to get it bought.

Maybe Kubota is changing that, but that $400 is an insignificant and meaningless amount on this size of purchase.

Don't get wrapped around the axle over pennies.

I wasn't implying that it would be a good or bad financial decision. I was simply pointing out that with current promotions, Kubota does in fact offer rebates in lieu of financing.

 

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With Kubota, rebates are what they are no matter if you pay cash or you finance. So Kubota obviously is not able to be used in this conversation. You walk in with $30,000 cash and I walk in with a modest down payment and finance say $24,000 and we both buy the exact tractor. We both pay the same number of dollars, but I borrowed their money with no additional financing costs. At the end, after I have paid off the loan note, you and I expended the same number of dollars (aside from the $75 charge from Kubota Financing for processing the loan app) for our tractors. You and I got the same deal, you handed over all of the $30,000 on day 1. I kept $24,000 in play in my stock funds and made the payments until I equaled you for total payment. But now I have more invested money than you because my $24,000 was still doing work for me.

They can be. Their msrp is based on "financing" and not the cash purchase because the majority finance. So whether you take their 0% or not, they have accounted for the borrowed money anyway in their msrp.
If their finished product after all is said and done comes in at say $27,500 which includes a 25% profit margin, labor and material cost, shipping, advertising or whatever, they will then account for the borrowed money. This amount is based on the term of the loan at anywhere between 4-7%. So whatever they arrive at, they'll tack on to the tractor so the tractor now becomes say a $30,000 machine msrp. From this point they can do whatever they want...rebates, incentives...0%...discounts. doesn't matter because they have already covered the cost of borrowed money so they can treat anyone buying a tractor exactly the same whether they pay cash or not. It is in their interest to do just that with this pricing strategy. Auto industry does the same thing and when they end up with"overstock" at the end of the sales year (which to them is usually August) they'll slip out this money to the consumer in the form of big rebates or 0%.
It is all "built in" and appears "painless" as a result or even "advantageous" to the consumer.

 

[schoolsout]

re: 0% offers

You are paying an inflated price for the tractor. There is no free lunch.

re: Investing Money

Markets don't always go up.

 

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I wasn't implying that it would be a good or bad financial decision. I was simply pointing out that with current promotions, Kubota does in fact offer rebates in lieu of financing.

I guess RSR, depends how one is wired. The word "value" to me, is not always measured in money. After all things considered, it is simply where you prioritize your "values". When I'm skidding that log in or pushing that 27" snow dump or pulling a hapless driver out of a ditch or lifting that 1000 lb thing, arriving at a sense of accomplishment at the end of the day, this brings a satisfaction that only comes with enjoying life. Many times that is priceless to me and as a result, denigrates the dollar sign. It's how I'm wired

 

[4570Man]

2 things: first the warranty is pro-rated. Usually these things drop precipitously after 5 years. A million miles, a billion miles or a trillion miles all have the same inference. A "wow" factor to suck the uninformed in.. They already know statistically that anyone going a million miles in a vehicle within a 5 yr period is slim to none. Your 10 yr warranty will be worth next to nothing at ten years.

I was thinking that there’s little chance of having a major repair between the end of the manufacturer warranty and the 10 year period and they’re probably up changing what’s essentially a not optional extended warranty.

 

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I was thinking that there’s little chance of having a major repair between the end of the manufacturer warranty and the 10 year period and they’re probably up changing what’s essentially a not optional extended warranty.

Sure...they have all the data to make sure this is next to no loss for them. As that 10 year mark approaches and say the car lunches it's tranny, that $2000 item that may have been almost fully covered within 5 years, might end up costing you at year 9 about $1800 but hey! it's warranteed!. It is all leveraged in to increase sales as a result of such a promotion. It's like going to the casino. Rarely do you beat the house.

 

[kenmac]

Buying used means (usually) paying cash. To get what I'd need that would be $12k or there abouts. I'd love to have 12k sitting in the bank for such a purchase, but alas, I do not.
So the only way to get a tractor of this price range is finance it.

It's much much easier to get finance on a new tractor than a used one - be that at the dealer or the local bank. Perhaps a home equity line of credit can be used as an easy way to get the funds.

I paid off my car and turned that payment into a tractor payment - so no issues financially - as long as the car lasts another 5 or 6 years!

As for the finance cost..it's renting money essentially. If the finance fee is $200/year that's the only cost above the tractor..so that's 'cost' for a year of having it NOW instead of some future time.

If I didn't have 12 K in the bank in case something happened. There's no way I'm financing a tractor,or anything else until I got some kind of emergency fund started.

 

[4570Man]

If I didn't have 12 K in the bank in case something happened. There's no way I'm financing a tractor,or anything else until I got some kind of emergency fund started.

Having 12k for an emergency fund doesn’t mean using that money to buy a tractor.

 

[Maharaja]

I financed by Kubota (delivered Friday) I spoke with several dealers seems like $600 or so cash discount.
Whereas MF had big difference if cash or 0%
0% is great but the difference I paid ($600) plus cost of insurance mentioned in a prior post.
Insurance is not cheap but does more than my homeowners for sure.
I typically pay cash