Financing Issue(s) getting financed?

[silvertramp]

the retailers are paying approx. 2.5% to accept the card . therefore we increase our prices 3 to 4% to offset the cost. SO in reality if your doing a cash back or miles card you are paying for that reward in increase goods prices . I offer a 3% discount if you pay with cash so which is the better deal ?????

I used to pay cash for my gasoline. Fill up, walk in and pay. When they went to pre-pay, I had to walk back and forth twice. And have the joy off waiting in line twice. If they want to lose 2.5% on gasoline sales, that's fine by me. It's not my system, it's theirs.

 

[mile9c1]

My score has never been higher, and I can walk into any store or dealership and basically sign a paper and walk out/drive out with pretty much anything I want. Never could do that in my younger "cash only" days.

I think you're missing the point of being "cash only". When you're "cash only" you don't need to finance the car because you have cash to pay for it. I paid cash for a new truck in February and I'm pretty sure it was easier to walk out after offering to pay with cash, than to apply for a loan.

 

[M5farms]

I used to pay cash for my gasoline. Fill up, walk in and pay. When they went to pre-pay, I had to walk back and forth twice. And have the joy off waiting in line twice. If they want to lose 2.5% on gasoline sales, that's fine by me. It's not my system, it's theirs.

They are not losing 2.5% they have already marked up the product by 2.5% and if you pay cash they make an extra 2.5% profit . Nothing in this world is free except the air you breathe.

 

[silvertramp]

I think you're missing the point of being "cash only". When you're "cash only" you don't need to finance the car because you have cash to pay for it. I paid cash for a new truck in February and I'm pretty sure it was easier to walk out after offering to pay with cash, than to apply for a loan.

I recently bought a truck for cash using my trade and CD bank check. Time was short so I put the remaining $5K on a card rather than fiddle around for the remainder. When the bill came in I paid it in full. Done.

 

[MessickFarmEqu]

No one really answered the question. Yes, KCC will make some silly decisions at times. Generally if we call and have a conversation with them they will iron things out. They have a very small staff given the amount of loans they do. For that reason there are automated processes and credit decisions that are made by policy & computers that often don't make sense. At that point we just pickup the phone and talk to a person who usually irons things out.

 

[DavesTractor]

Lots of good stuff here in this thread. A few thoughts if I may ramble:

I'm a tractor dealer, and M5farms has it right. When as a consumer we get our 1% "back", keep in mind that the price was raised to cover that. If credit cards did not exist, prices for items would be lower. But the convenience of a card is hard to argue. I bought a couple of forklifts a while back from a major rental company and I asked them if I could put them on my credit card. To my surprise, it was no issue. 1% back on tens of thousands of dollars in one transaction was pretty cool. Had they been an independent smaller rental customer I am sure they would have balked at that.

As for the original poster, thanks for your civility when folks are beating you up a little bit. I understand your position, and what you say makes sense to me. However, finance companies are more likely to ride out a loan for someone whose credit has become sketchy rather than to enter into any new agreement, even if the new agreement is better than the prior. Because when they first started financing with you, your credit was great. Now it is not, and now you are treated as a marginal or conditional risk.

Like most dealers, we sell millions of dollars worth of tractors a year, roughly 65% financed. Occasionally we will get rejected on a sale for which I think the rejection is unmerited. On 3 occasions that I can recall, I contacted the finance company and pushed them to approve a loan that they rejected. A volume dealer can sometimes make this happen. Ironically on all three of those cases for which I got my way and they reluctantly approved, the customer defaulted on the loan. Really? To me they looked good and the reasoning for not initially approving them looked spurious. But these loan underwriters seem to know what on paper now later becomes a default. They may know that guys with green socks eating potato chips on Tuesdays always default....it doesn't matter if it makes sense. They crunch enough data to become pretty good at what they do. By the way, on each of these, I bought the tractors back so as to not cause the loan company any loss. I felt I should, and each had enough down payment that it really wasn't a loss for me. So in a sense, it wasn't much of a risk (big down payment) but finance companies prefer to not repossess.

 

[M5farms]

Lots of good stuff here in this thread. A few thoughts if I may ramble:

I'm a tractor dealer, and M5farms has it right. When as a consumer we get our 1% "back", keep in mind that the price was raised to cover that. If credit cards did not exist, prices for items would be lower. But the convenience of a card is hard to argue. I bought a couple of forklifts a while back from a major rental company and I asked them if I could put them on my credit card. To my surprise, it was no issue. 1% back on tens of thousands of dollars in one transaction was pretty cool. Had they been an independent smaller rental customer I am sure they would have balked at that.



As for the original poster, thanks for your civility when folks are beating you up a little bit. I understand your position, and what you say makes sense to me. However, finance companies are more likely to ride out a loan for someone whose credit has become sketchy rather than to enter into any new agreement, even if the new agreement is better than the prior. Because when they first started financing with you, your credit was great. Now it is not, and now you are treated as a marginal or conditional risk.

Like most dealers, we sell millions of dollars worth of tractors a year, roughly 65% financed. Occasionally we will get rejected on a sale for which I think the rejection is unmerited. On 3 occasions that I can recall, I contacted the finance company and pushed them to approve a loan that they rejected. A volume dealer can sometimes make this happen. Ironically on all three of those cases for which I got my way and they reluctantly approved, the customer defaulted on the loan. Really? To me they looked good and the reasoning for not initially approving them looked spurious. But these loan underwriters seem to know what on paper now later becomes a default. They may know that guys with green socks eating potato chips on Tuesdays always default....it doesn't matter if it makes sense. They crunch enough data to become pretty good at what they do. By the way, on each of these, I bought the tractors back so as to not cause the loan company any loss. I felt I should, and each had enough down payment that it really wasn't a loss for me. So in a sense, it wasn't much of a risk (big down payment) but finance companies prefer to not repossess.

you worded it better than I ever could . I Sell roofing and we offer terms to a segment that does not have a very good reputation and I have seen my fair share of marginal credit. Im not sure about the equipment industry but in ours our credit dept has the ability to see or talk to other companies the applicant does business with as well as personal and business credit. I also know that just last year we paid the CC companies several million dollars in fees. when evaluating my P&L each month it will make you nauseous at the amount of profit you lose and to top that off every customer wants to dicker the margin down on the front plus you have competition that has never heard the word profit.

 

[ovrszd]

Well, you are wrong in thinking this is a scam. I made 1500 bucks last fall financing a new f150. Could've paid cash, but Ford offered an extra 1500 off for using FMC. Paid loan off at 90 days... And, being a business the fico score determines my insurance rates, business licensing acceptance, and many other things.

It's a total scam designed to put consumers in debt. And it works on 99% of consumers.

Obviously some posters here have the discipline to take advantage of the "bait" being dangled. For each of you there are 10 readers of this thread that swallowed the hook.

Do any of you that work this system to your advantage think you represent main stream American consumers?

 

[ovrszd]

Yep. CC companies have to make money some how.

But most places dont offer a cash discount. So even if you are paying with cash, you are still paying more.

If the cash discount exceeds the incentive amount I get from the CC company, I pay cash. IF not, I pay CC.

Bought my dump trailer with CC. $6000 purchase. Cash discount was $50. Credit card perk was 2% ($120) So I paid with the card, let the retailer pay their 3% fee ($180), of which the CC company keeps the $60 and gives me $120 back. So In reality:
I paid $5880
CC company profited $60
Retailer got $5820

Now wouldnt it have just been easier for me and the retailer to split that $60 profit the CC company made? And sell me the trailer for $5850? But no, they took a hard stance on $50 off is the best we can do for cash. If All retailers offered a ~2% cash discount, I wouldnt have a use for my card.

Good stuff there.

Describes the scam very well.

And you took advantage of it very well.

Stupid on the dealer's part. You coul make him a lot of money if he'd listen to your explanation.

 

[Slowpoke Slim]

I think you're missing the point of being "cash only". When you're "cash only" you don't need to finance the car because you have cash to pay for it. I paid cash for a new truck in February and I'm pretty sure it was easier to walk out after offering to pay with cash, than to apply for a loan.

No.

You are entirely missing the point. It costs you more money out of your own pocket to be able to "boast" to being "cash only". You pay higher insurance premiums just to be able to impress your friends that you "always pay cash". Your credit score is a very huge factor in how your insurance premiums get calculated. Not my idea, not my rules, the insurance industry created that measuring tool all on their own.

My credit score is high, which helps substantially in driving my insurance costs down.

That is the entire point.

 

[DavesTractor]

It's a total scam designed to put consumers in debt. And it works on 99% of consumers.

Obviously some posters here have the discipline to take advantage of the "bait" being dangled. For each of you there are 10 readers of this thread that swallowed the hook.

Do any of you that work this system to your advantage think you represent main stream American consumers?

Obviously the "scam" works or they wouldn't try it. But I think your idea of it causing 99% of all consumers to get addicted to debt (my words, not yours) is much higher than reality. I read an article in Money, Feb 2016 that said the average credit card debt in the USA was $4717 and the average interest rate was 15%. However the article also stated that 35% of folks pay their entire credit card bill each month and do not roll over a balance and do not pay interest. Of course that means that 65% do carry revolving debt, I understand that.

But those of us that do not like paying interest and are able to buy with cash and are careful with our money are not such a small group. We are not the majorly, but we aren't lonely either. And it is this group of roughly 35% of all USA adults that can take advantage of "bait" to our benefit.

On a related subject, I heard that on average an 84 month term tractor finance package gets paid off in 57 months. I find that interesting.

 

[ovrszd]

No.

You are entirely missing the point. It costs you more money out of your own pocket to be able to "boast" to being "cash only". You pay higher insurance premiums just to be able to impress your friends that you "always pay cash". Your credit score is a very huge factor in how your insurance premiums get calculated. Not my idea, not my rules, the insurance industry created that measuring tool all on their own.

My credit score is high, which helps substantially in driving my insurance costs down.

That is the entire point.

Calm down.

It's been clearly explained many times in this thread where the costs of financing are hidden. We're so addicted to it by now that we actually think it's good for us. Remember, the first hit of an addictive substance is always free.

 

[ovrszd]

Obviously the "scam" works or they wouldn't try it. But I think your idea of it causing 99% of all consumers to get addicted to debt (my words, not yours) is much higher than reality. I read an article in Money, Feb 2016 that said the average credit card debt in the USA was $4717 and the average interest rate was 15%. However the article also stated that 35% of folks pay their entire credit card bill each month and do not roll over a balance and do not pay interest. Of course that means that 65% do carry revolving debt, I understand that.

But those of us that do not like paying interest and are able to buy with cash and are careful with our money are not such a small group. We are not the majorly, but we aren't lonely either. And it is this group of roughly 35% of all USA adults that can take advantage of "bait" to our benefit.

On a related subject, I heard that on average an 84 month term tractor finance package gets paid off in 57 months. I find that interesting.

Good stuff Dave!!!!

Slightly renews my faith in our ability to manage credit!!!!

So,,,, the lenders are still winning.

 

[hystyk24]

I guess I'm being dense here. I'm one of these folks who doesn't use credit...and it has me in high insurance premium land...so maybe my opinion ain't worth much. I think you're asking the wrong questions here. Kubota is a free business. They are not required to loan you money at all. They do so as a business to make money. They are well aware that if your home is foreclosed on, they could easily be the "next on the list". As your foreclosure drags on, each day it makes you look worse to any potential lender.

I know it isn't my place...but why are you worried about new equipment if you're under foreclosure? Financially, you are already in a "loan hole"...why dig it any deeper?

Not trying to be a butt..but I think you asked a "loaded question" here. Kubota, in my opinion, was well within their rights to require whatever they felt most comfortable with on the loan. You can always get financing elsewhere...

You guys are killing me. This is a simple question about basic finance and/or good business practice. This is not about weather they should or should not make the loan or weather YOU would or would not write the loan. It's simply about the current loan they have with me and will continue to have with me if they don't do a new deal. The new deal has a balance Smaller then the current one and the collateral on the new being 2.5k more then the current loan. NOT one person has answered the simple question I asked a half a dozen times. What is the downside of writing the new loan? If you can't substantively answer that simple question then you get the point... �� And to address a point or two: what is "getting in deeper" mean? I have one current loan (0% Kubota) which would not have changed with a new deal. I am blessed to have cash and no real need for credit at this point in my life. Keeping at least a single revolving loan open weather you have the cash or not is important for everyone, but not mportant enough for me to keep this bad deal and why I just paid cash. Kubota lost out on the zero turn sale as a consequence... And the foreclosure issue is something not worth exploring here unless anyone has experience with a multi million dollar home on the ICW incombered by CAFRA fights with state and local government over permitting jurisdiction which required me to vacate my then vacation home...

 

[hystyk24]

Calm down.

It's been clearly explained many times in this thread where the costs of financing are hidden. We're so addicted to it by now that we actually think it's good for us. Remember, the first hit of an addictive substance is always free.

One of those higher costs is the forced insurance and EXACTLY why I did not want to put the mower "cash" deal together with the RTV deal. However, 0% means I can use my cash to make cash over the duration of this loan... It also allows more flexibility to structure tax issues accordingly...

 

[DavesTractor]

You guys are killing me. This is a simple question about basic finance and/or good business practice. This is not about weather they should or should not make the loan or weather YOU would or would not write the loan. It's simply about the current loan they have with me and will continue to have with me if they don't do a new deal. The new deal has a balance Smaller then the current one and the collateral on the new being 2.5k more then the current loan. NOT one person has answered the simple question I asked a half a dozen times. What is the downside of writing the new loan? ....

I think I answered that questioned, but may have buried it amongst too much rambling. Let me be more concise, which is a real challenge.

The downside is that the existing loan was written when you had no flaws in your credit. If that loan defaults, nobody gets in trouble, so to speak, as it was a good risk that just went bad. But if someone now approves changing this loan position, even if for the better, they are essentially making a new loan to a guy with a credit issue and their name is on the approval. If you then default, who approved a loan with a guy with a foreclosure? That is my thought. No one wants to take a personal risk to push for the approval. Even though it might be in their best interest to do so. That is the only reason I can think of. If I owned the bank, I'd have taken your deal and strengthened my position.

And that really stinks about your foreclosure, sounds like this has little to do with ability to pay, and more to do with too much government intervention....but that's another can of worms.

 

[Steppenwolfe]

It's a total scam designed to put consumers in debt. And it works on 99% of consumers.

Obviously some posters here have the discipline to take advantage of the "bait" being dangled. For each of you there are 10 readers of this thread that swallowed the hook.

Do any of you that work this system to your advantage think you represent main stream American consumers?

Well, it isn't my system... so I would assume it works for many other Americans as well. Perhaps just not for those who can't manage their credit, lifestyle, or choices...

 

[Steppenwolfe]

Calm down.

It's been clearly explained many times in this thread where the costs of financing are hidden. We're so addicted to it by now that we actually think it's good for us. Remember, the first hit of an addictive substance is always free.

Speak for yourself, leave " we " out of it.

 

[cford36]

You guys are killing me. This is a simple question about basic finance and/or good business practice. This is not about weather they should or should not make the loan or weather YOU would or would not write the loan. It's simply about the current loan they have with me and will continue to have with me if they don't do a new deal. The new deal has a balance Smaller then the current one and the collateral on the new being 2.5k more then the current loan. NOT one person has answered the simple question I asked a half a dozen times. What is the downside of writing the new loan? If you can't substantively answer that simple question then you get the point... �� And to address a point or two: what is "getting in deeper" mean? I have one current loan (0% Kubota) which would not have changed with a new deal. I am blessed to have cash and no real need for credit at this point in my life. Keeping at least a single revolving loan open weather you have the cash or not is important for everyone, but not mportant enough for me to keep this bad deal and why I just paid cash. Kubota lost out on the zero turn sale as a consequence... And the foreclosure issue is something not worth exploring here unless anyone has experience with a multi million dollar home on the ICW incombered by CAFRA fights with state and local government over permitting jurisdiction which required me to vacate my then vacation home...

I don't think anybody is arguing with your "big picture" view of the situation. (I get it) But I don't think many, if any, finance companies look at it that way. (That's what you don't seem to want to understand) They are a plug the numbers into the formula and see what spits out. In your case your original loan was based on a completely different set of circumstances, ie no foreclosure. The downside of writing the new loan (since you insist on an answer) is that based on your current set of circumstances the formula they use (probably the same as the first time) said no without additional $$. Your current loan means nothing, its done, its in effect, and lucky for you they can't re-evaluate it because you probably wouldn't get it now with your new set of circumstances. If you want to admit it or not you are now seen as a high risk due to the foreclosure, and they wanted significantly more from you to guarantee the loan. (Banks don't want a "windfall" where you put 75% down and then they end up foreclosing on it. They don't want to be bothered with it. They just want you to make payments.)

I'm not saying its right or wrong. I'm just saying thats they way it has works.

I'm also not judging the situation of the foreclosure. Just a fact, for whatever the reason, its there and that's what changed the whole picture.

 

[cford36]

I think I answered that questioned, but may have buried it amongst too much rambling. Let me be more concise, which is a real challenge.

The downside is that the existing loan was written when you had no flaws in your credit. If that loan defaults, nobody gets in trouble, so to speak, as it was a good risk that just went bad. But if someone now approves changing this loan position, even if for the better, they are essentially making a new loan to a guy with a credit issue and their name is on the approval. If you then default, who approved a loan with a guy with a foreclosure? That is my thought. No one wants to take a personal risk to push for the approval. Even though it might be in their best interest to do so. That is the only reason I can think of. If I owned the bank, I'd have taken your deal and strengthened my position.

And that really stinks about your foreclosure, sounds like this has little to do with ability to pay, and more to do with too much government intervention....but that's another can of worms.

I think we were typing the same thought at the same time.