0% doesn't always mean 0%

[Gerold]

Last fall I bought my kubota L3200. 0% financing fo 60 months or $1000 cash discount. I spent some time with a financial calculator. That $1000 worked out to the equivalent of 2% interest. My credit union couldn't beat that rate, so Kubota financing it was.

 

[droptop]

I found a GREAT calculator that will show you what the real cost is and if it is better to take the 0% or whatever discount that they are offering. If they are offering a free FEL, you just have to consider that the additional price you pay for the loader is your discount if you take the 0%.

Car Rebate Calculator

The only time I didn't need this was when I bought a new VW a couple of years ago, they offered 0% or no discount. Made my decision real easy.. take the free money!

 

[MasseyWV]

some customers would walk because we were $1300-$2500 (more expensive tractors have higher buydowns) higher than the guy selling at cash price and they didn't listen carefully enough to hear the discount part of the sales pitch.

As a customer, a sales pitch of any kind will make me walk faster than anything else. When I visit a dealership, I want to know the bottom dollar price before I hear anything else. No BS of any kind, or I'll leave so fast that the salesman won't know what hit him. When I bought my truck, many salesmen learned this fact the hard way.

 

[DavesTractor]

As a customer, a sales pitch of any kind will make me walk faster than anything else. When I visit a dealership, I want to know the bottom dollar price before I hear anything else. No BS of any kind, or I'll leave so fast that the salesman won't know what hit him. When I bought my truck, many salesmen learned this fact the hard way.

Define "bottom dollar price". Customers want options, and all manufacturers have financing options. So is the "bottom dollar price" the cash price? And if the options are explained, is that a BS sales pitch?

I ask these questions sincerely. As dealers we know you don't want smoke and mirrors, but since you don't have a label on your forehead saying "I'm a cash buyer", or "I only care about the monthly", or "I only buy with zero percent" we have the challenge of answering your pricing questions simply, yet explaining options.

Any input, not just from Massey WV is appreciated. I suspect it is a lot about the attitude of the salesman and the salesman having an honest approach.

 

[MahindraDon]

Ya'll have got me smiling. I am a Mahindra dealer and I have voiced my opinion about this tactic. What it boils down to is that everybody else is doing it, so why don't we? Just like the bank that sends you checks that say 0% for a year on the front, then on the back they say 10% processing fee right off the bat. You really can't get something for nothing. I advise my customers to take the standard rate because you are never guaranteed to pay interest, but if you elect to pay the higher price you are guaranteed to pay more.

 

[AchingBack]

In 2005 I went with the 0% loan from Agricredit. I had to pay a $225.00 administrative fee in order to get it. It felt like a bee sting that took a long time to go away.

 

[MasseyWV]

Define "bottom dollar price". Customers want options, and all manufacturers have financing options. So is the "bottom dollar price" the cash price? And if the options are explained, is that a BS sales pitch?

I ask these questions sincerely. As dealers we know you don't want smoke and mirrors, but since you don't have a label on your forehead saying "I'm a cash buyer", or "I only care about the monthly", or "I only buy with zero percent" we have the challenge of answering your pricing questions simply, yet explaining options.

Any input, not just from Massey WV is appreciated. I suspect it is a lot about the attitude of the salesman and the salesman having an honest approach.

For me, the "bottom dollar price" is the price of the tractor, cash or otherwise. This business of having a different price for cash v/s financing is ridiculous. As for determining the price of the tractor, the dealer simply has to take what he has in it it and add his profit margin plus any other fees or expenses, without the need for all the haggling or guessing games that so many dealers like to play. If financing is involved, simply include the interest and/or fees up front because there is no need to hide the interest using 0% or other schemes and tricks.

I understand that the pricing of a tractor must take into account any options the buyer may want, it's just that personally I find the whole experience of having to visit dealerships to be increasingly bothersome when all I want to do is buy... whatever. All too often, I've encountered dealers that seemed to think I was stupid or that I hadn't done my homework.

For example, in my recent dump trailer search, I called the same local dealer 5 different times using 5 different phone numbers while changing my voice and speech patterns, just to see what kind of prices I would be quoted. Not surprisingly, I was quoted numbers that were all over the place, being told each time that it was their "bottom dollar price" which was obviously not true. I did the same thing when I bought my truck and the dealership that was the most consistent in their pricing (within reason) got the sale, having never known why I chose them over all the rest.

Just to be clear, I wasn't trying to single out DavesTractor by quoting his post, it just happened to be relevant to what I wanted to say. Having spoken to DavesTractor privately, I can honestly say that he seems to be much more straightforward and forthcoming than most dealerships I've encountered.

 

[teg]

...Any input...

Hey Dave, As I see it, Don't call it 0% because it's not if you can get a cash discount. Calculate it out and be upfront what the real percent is. :2cents:

 

[DavesTractor]

Hey Dave, As I see it, Don't call it 0% because it's not if you can get a cash discount. Calculate it out and be upfront what the real percent is. :2cents:

Good input. It is nice to see what customers think is fair. We have to balance simplicity, by customers wanting options. Ironically, simplicity is perceived by many as fair and honest, where a complex set of options, even if clearly defined, are seen by some as a sales pitch.

I guess we could say "this is 0%, but when you calculate the loss of discounts, it actually comes to 2.79%, even though the contract wiill show 0%". I just made up the 2.79% number, but you get the drift. Seems reasonable, and I sort of like the idea. But then they ask, "what if I pay it off early" and that opens another discussion, since if you lose all discounts up front, you can't gain any of them back by paying off a 0% loan early.

Keep up the input if you all don't mind. I need to learn how to better sell ya'll tractors.

 

[ssg510]

Just a couple of things. Most people on these forums are not, in my opinion, "typical" buyers, so we as a group do alot more research than probably most. I think it would be nice to have a dealer say "this tractor cost us x amount of dollars which includes prep, freight, set up etc. We need to get at least, lets say, $1,500 as profit. I know that dealers work to make a profit and stay in business, I can accept that. It is the whole hide the ball, smoke and mirrow bit that gets me. If a dealer shows me what they have in a unit and then what they need to get for profit, i feel that they are being up front and fair. That is why I allways ask for the "cost out the door" price first and then get the other prices. I can add and figure what the other options will cost me. When shopping lately I tell the dealer that I know the routiene and I want the cash price, regular finance rate price and the zero percent price. As soon as they know that I know the deal on the prices they seem toget a little more reasonable. Of course many people go right in and will pay the big price just to get the zero percent, just like paying msrp at a car dealership.

 

[rockshaft]

Good input. It is nice to see what customers think is fair. We have to balance simplicity, by customers wanting options. Ironically, simplicity is perceived by many as fair and honest, where a complex set of options, even if clearly defined, are seen by some as a sales pitch.

I guess we could say "this is 0%, but when you calculate the loss of discounts, it actually comes to 2.79%, even though the contract wiill show 0%". I just made up the 2.79% number, but you get the drift. Seems reasonable, and I sort of like the idea. But then they ask, "what if I pay it off early" and that opens another discussion, since if you lose all discounts up front, you can't gain any of them back by paying off a 0% loan early.

Keep up the input if you all don't mind. I need to learn how to better sell ya'll tractors.

When I add up my payments (installments as JD calls them) I have the original price I was quoted (minus my deposit). I've done this twice over the years, and as I said before, none of these caveats came up during my price negotiations. I just worked my best deal, asked if the promo financing was available, and done. I like the ease with which it has worked. I never mentioned cash or monthly payment amounts or anything (until the end). I always just figured JD Financial was more about selling machines than earning interest on loans...

 

[teg]

...Most people on these forums are not, in my opinion, "typical" buyers, so we as a group do alot more research than probably most.....

:laughing: I found the site *after* I bought... otherwise, I might not have bought the tractor I ended up with. I went to 4 places, the first one was the highest price but asked me to let them "beat" the other dealers but I never went back to let them try. Ironically, that's the dealer I buy all my supplies from and conciser them my "adopted" dealer.

...installments as JD calls them...

JD is a horse of another color. They hold a pretty tight grip on the price because they can, much like Sthil. Some of the "other" tractor brands have to compete partially on price.

 

[Ram4x4]

Ram4x4, I am interested in your response, as I have debated with dealers the best way to handle the buydown aspect of the 0%. For you, maybe it would have been more palatable if the dealer had all his prices at 0%, then just mentioned that there was deep discounts for cash? I mean, if you are planning to go with 0%, that sure sounds better than getting the cash price and having to buy up. Same deal, different angle.

Surely we know that 0% is not free, someone pays for the free interest. (I know there are occasional examples where 0% is offered without a cash discount option, but that is very rare). What is the best manner for a dealer to approach this? This is a serious question. There are 3 basic prices on each model. Cash or standard rate (largest discounts/rebates), reduced rate such as 4.25% (no discounts given, no buydowns needed) and 0% (buydowns needed). So when a customer says, "how much for a 5035", a dealer must either interogate the customer to find out how he wants to buy, or throw out a price and then upsell/rebate from there. It's not easy.

I used to question the buyer before giving a price, but I hate that personally. So we decided the true price is what a buyer will hand to a seller in the equivalent of $100 bills. That is the price. If you want 0%, you pay more, exactly the amount it will cost me.

Generally buying the 0%, if you do not pay it off early, is a little better deal than buying at standard or reduced rate. But since you have paid the "interest" up front, it only pencils out against the other rates had you ran all loans to full term. If you are going to pay it off early, take the discounts up front and use standard rate.

Always interested in feedback. Its how we learn.

Here's my take on it all. If you are offering 0% then it should be just that. If you can't do it and make a profit without someone (i.e. the customer) having to eat the extra money, then don't offer it, period.

As I said, if I pay the "interest" up front then it's not really 0%, so why even have or offer such advertising if it isn't really what it appears to be? Mahindra is offering something that isn't what they claim it to be.

There should only be one price, period. If I pay cash, I pay that price. If I finance through the dealer then I pay that price plus the interest (whatever the rate is) over the life of the loan.

When I finance something I usually do it through my own financial institution as the majority of dealerships can rarely, if ever match the interest rate I get through them. That's not to say I won't use the dealers financing if they can beat the interest rate, after all my aim is to gt the best deal I can and interest rates are the competition amongst financial institutions.

In my opinion this 0% offer from Mahindra is a bit of a shyster deal since it isn't really 0%. Some might even consider it false advertising, but I'm not interested in pursuing such an angle.

 

[Ram4x4]

For me I would have been pleased as can be if I were told here is our 0% price and here is the cash or self financing price. It would have taken all the angst out of my purchase. I just finished the refi of the Mahinra loan that was closed 3/19, so I am back at my 2.99 and everything is great.

Kootch, I think you missed the point.

When I see an advertisement for 0% interest for 60 months, I am not expecting to see a $4,000 increase in the sales price if I choose those terms.

The price of the tractor should be the price of the tractor, period. Be it cash, financed or what have you. The price of the tractor should have a profit built into it for the tractor itself. If I finance it then the interest I pay is the profit the financial arm makes for floating the money of the loan.

If they aren't able, or willing to offer the same price at 0% then it is simply NOT 0% and the impression left is one of less than honorable intent.

This business of price being dependent on the financial terms you choose is less than honest in my opinion.

The bottom line is simply that Mahindra advertises 0% interest when in fact it really isn't. You get a jacked up price and are expected to pay that difference up front, so it is NOT 0% in any stretch of the word.

I tell ya, after this conversation and reading some of the posts here, if any of the other brands of tractor offered anything remotely close to the capabilities of the 5035 and in the same ballpark pricewise, I'd be choosing not to buy the Mahindra. That, however isn't the case. Sooo, when I am ready to buy in the next couple of months it will be a 5035, but I will not be using their financing, or their "0%" BS offer. I will negotiate cash price and use my own financial institution.

 

[Ram4x4]

The 0% buydown on the Mahindra is on a sliding scale, since it doesn't cost nearly as much to provide 0% on a $15k rig as it does on a $40k rig. I believe the 0% buydown (dealer lingo for what we have to pay to go from 4.25% to 0%) is about $1375 on a Max series. None of the model buydowns are $4000. Dealers can set prices however they want and I guess they could charge more for the zero than it costs them, but that does not seem smart.

I just mention this as I don't want others to think there is a $4k price tag on 0% for 60 months. $1375 isn't bad for 5 years of financing a $15-20K rig. $23/month is what that cost. I spend more than that in coffee....

Yes, but if you tack on $1375 to the price it isn't exactly 0% anymore is it?

What's confusing to most is all these BS numbers games the dealers try to play.

Only the most naive buy into the sucker games that car dealers have been pulling for years, and is well known by anyone that's been around the block more than once.

I'm just sad to see this same game is apparently being played by the tractor dealers as well.

 

[Ram4x4]

4000$ did seem like a stretch to me! But even so, 1375$ is something- and this discussion of financing buydown never came into play with either of my tractor purchases. I negotiated a price (no talk of cash or financing), and when I thought it was a price I was willing to pay, I agreed and asked for 0%financing. There is no buydown in my case- built into the package price? yeah certainly, but it's my opinion that comes from their end (dealer/manufacturer).

It's no stretch. I received two quotes on a 5035 HST with FEL. $25,000 cash or $29,000 if I wanted 0% interest.

 

[Ram4x4]

Ya'll have got me smiling. I am a Mahindra dealer and I have voiced my opinion about this tactic.......

You really can't get something for nothing.

Then perhaps the dealers and the company should stop advertising that we can.

 

[Ram4x4]

In 2005 I went with the 0% loan from Agricredit. I had to pay a $225.00 administrative fee in order to get it. It felt like a bee sting that took a long time to go away.

I was quoted $25,000 for a 5035 HST with FEL cash price. If the 0% interest deal would have been a $225 "administrative fee" on top of that it would have been a no brainer, but when I state I am interested in the advertised 0% deal and then get told the price of the tractor for that deal is now $29,000, it doesn't sit well with me.

 

[LAWALLSTRACTOR]

I was quoted $25,000 for a 5035 HST with FEL cash price. If the 0% interest deal would have been a $225 "administrative fee" on top of that it would have been a no brainer, but when I state I am interested in the advertised 0% deal and then get told the price of the tractor for that deal is now $29,000, it doesn't sit well with me.

Mahindra is just being up front about the whole thing, it isn't any different than the competition offering 0% or a rebate.

 

[MasseyWV]

Mahindra is just being up front about the whole thing, it isn't any different than the competition offering 0% or a rebate.

Mahindra being "up front" is not exactly the description I would use. Their 0% financing is nothing more than an elaborate scam designed to hide the true interest rate, as evidenced by having different tractor prices for cash v/s financing. Not to mention the fact that Mahindra seems to think something as simple as posting MSRP prices is a state secret.

Hiding things only makes them look dishonest. IMO