Interest Free Financing

[R Barger]

When you can buy a tractor $3500.00 cheaper for cash how is that interest Free financing?

 

[CloverKnollFarms]

When you can buy a tractor $3500.00 cheaper for cash how is that interest Free financing?

Well, you are right. It's not.

Nobody lends money for free... That is just bad business sense.

Or, they offer 0% financing because they have already rolled it into the MSRP and EVERYONE pays for it

 

[WM75Guy]

Marketing gimmick. You still pay interest, it is rolled into your final price. Hence the cash discount if you don't go the 0% route, they subtract the interest from the final price. Usually 0% financing allows people who cannot make a large down payment or pay cash for something to buy on credit. But sometimes the cash discount is so small that 0% makes better financial sense. When I bought our Kubota RTV-X I had the option of $300 cash discount or 0% for 48 months. The $15,000 I would have paid for the cash discount makes me $600/yr in interest, so I opted for the 0% financing and left my money in the bank. I don't mind using other people's money if it makes me money.

 

[EddieWalker]

I ignore the wording invented by the Marketing Department and run the numbers when buying.

For me, interest free financing added a little over $3,000 to the cost of my tractor, but the lowest interest rate they offered added more than twice that much by the time the loan was paid for.

 

[ArlyA]

When sales drop for any ol product, company's sometimes lower the prices, or offer lower or free interest rates to keep the production line going. A plant shutting down, then reopening it a year later is quite costly. We got zero percent on our Ranger back in 2019. Was that just stupid? Not everyone is sitting with a bank account full of $$.

 

[CloverKnollFarms]

No, because they keep paying interest

 

[Rdrcr]

Some dealers pay the finance charge for the customer making the cash price the same as finance price.
But, ultimately, yes, someone is paying for the interest.

Mike

 

[Michael_J]

Nothing's really free. The factory pays the bank so they can say 0%, and that cost's built into the price. Cash buyers just skip that part and get the discount.

 

[Slomotion]

If it's a major purchase, or a special credit card (big box store) purchase I'll ask for six months or twelve months interest free on the item then double up on the payments to be done long before the contract expires. They're betting you're going to go over the allotted time then they get all the back interest too.

 

[dodge man]

I bought my current JD at 0% and they would not lower the price for a cash discount. It was already discounted quite a bit so I took the 0%, for 5 years as I recall. I agree though, it’s not really free.