Buying Advice What is going on here?

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Remember what a down payment is for. Contrary to popular belief, it is not to reduce the amount the borrower is paying monthly although certainly used for that purpose to the customer's way of thinking. The lending institution is looking at it entirely different. Is this tractor company doing its own financing by any chance or are they connected to a local financial institution? The primary purpose of a down payment is to ensure that the lending institution can recover the balance due on the loan in the event that the borrower fails to keep paying on the loan. If the borrower fails to repay the loan, the lender is legally entitled to sell the asset and retain a portion of the proceeds sufficient to cover the original amount of the loan. In requiring a down payment, the lender greatly increases the chance that any such future sale would cover the full amount of the loan which in this case would be easier to do with an inflated sale price. This sale only needs the lender to recover the difference from the original selling price and the down payment amount as opposed to the entirety of the selling price. He is further asking for an actual down payment because if you, the borrower, is unable to pay off the loan, you forfeit the down payment amount which in this case would be actual money.
This is acting as a double dip in this case in case of loan forfeiture. A rebate has to be labeled as such if indeed there is one and can be used as payment to the dealer or a check to the customer. If either were the case, the original sale price would have to be $13000.
I sold cars and trucks for 20 years but I'm thinking lending is lending whether it be for a tractor or a car.

 

[Kyle_in_Tex]

I agree with arrow and Mtnview. The lender wants you to have a stake in the venture. If you don't put anything down, the chances are much higher you'll walk away from the deal leaving the lender with their pants down. Their only recourse is to do their best to ruin your credit. I guess they can sue the dealer too.

Is the lender a major lender such as deere credit, or is it a small local bank. I would not proceed with the deal as such. If the lender sniffs out the cheating, they can repossess the tractor at their will.

If the lender offers nothing down take it. But if not, I'd recommend you put some money down.

 

[dgl24087]

Auto dealers in my area do this quite a bit.

 

[wvpolekat]

The primary purpose of a down payment is to ensure that the lending institution can recover the balance due on the loan in the event that the borrower fails to keep paying on the loan. If the borrower fails to repay the loan, the lender is legally entitled to sell the asset and retain a portion of the proceeds sufficient to cover the original amount of the loan.

Right and wrong. The lender is only entitled to recover the balance due (plus fees and such), not the original amount of the loan. If you have one payment left and they repo the vehicle, anything they get from the sale of it above the amount owed plus fees and such must be paid to the borrower, as they owned that equity, not the lender.

 

[Chuck_Lind]

Also, unless you get the farm use tax exemption, you will pay sales tax on the higher amount.

Buy the tractor in New Hampshire...no sales tax.

 

[LBrown59]

1*I have mixed feeling son this.

2*Let's say the unit retails for 20K. And lets assume a lot of units were sold at financed on that 20K figure, with 10% down- financing 18K.
If you are a good negotiator or shopper and negotiate a price of 18K - why shouldn't you be able to make the identical financing of 18K on the same unit as the guy who paid retail? In both cases, the amount financed is the same. If the bank made you put down 10% on you 18K purchase, then you only get a loan for 16,200. For the same machines, why should you have to provide less risk to the bank than the other guy?
3*That does not seem fair, either, to the purchaser.
4*THe good shopper and lazy shopper are buying the exact same machine- and the bank gives the lazy shopper 20K, but only 16.2K to the good shopper.

1*I don't , I agree with you 110%.
2*I agree with everything you say here because you are exactly on target.
3*Not only is it not fair to the buyer but it penalizes the seller for giving the buyer a price break.
4*And screws over the seller in the process.

 

[arrow]

Right and wrong. The lender is only entitled to recover the balance due (plus fees and such), not the original amount of the loan. If you have one payment left and they repo the vehicle, anything they get from the sale of it above the amount owed plus fees and such must be paid to the borrower, as they owned that equity, not the lender.

I think you misunderstood or read too fast The lender is only entitled to get back what he loaned. If the item is repoed and say there is $400 left off a $10000 loan, he, the lender is only entitled to the $400 as that equates to the "original amount " of the loan after it is added to the credit. I did say the lender is only entitled to "retain a portion of proceeds left" that covers the original amount of the loan.

 

[FallbrookFarmer]

Right and wrong. The lender is only entitled to recover the balance due (plus fees and such), not the original amount of the loan. If you have one payment left and they repo the vehicle, anything they get from the sale of it above the amount owed plus fees and such must be paid to the borrower, as they owned that equity, not the lender.

It would depend on which state the OP was in. Different States,Different laws.

 

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It would depend on which state the OP was in. Different States,Different laws.

If the lending or financial institution is a bank or an LLC company, most of these lending laws are federally regulated.

 

[DGS]

I don't know about installment loans but I see nothing wrong with it when it comes to mortgages as the loan value should be determined by the real estates value rather than it's selling price.

This isn't real estate. It's fraud.