New Tractor Purchases

[herefromthere]

Going the financing route, even with the loss of the $1k cash discount (for Kubota,) can be a strategic decision. Assuming you'll be able to stay solvent, going that route allows one to make payments with future dollars that will likely be worth a whole lot less than current ones.

It's an interesting mental exercise to consider the pros & cons of paying cash vs. financing. If one pays cash, they are paying with today's dollars, and there is no risk...or reward. If one has cash but chooses to finance, they may get to pay back with future devalued dollars, but there is the risk of whether or not the cash may be lost via poor investments or other causes. On the up side, if one can invest the money not spent up front, a very small percentage annual return would more than cover the loss of the cash discount.

Has this line of thought been considered in anyone else's "to finance or not to finance" decision?

 

[Hollow]

Wasn't fortunate enough to pay cash... Just getting started, bought a house on ten acres, held off as long as I could but eventually I had to bite the bullet. I had to financed it but doubled down on the payments and paid it off in a little over two years.

 

[namesray]

i have a kubota b7800, rtv 900, and multiple attachments for use with my small business. all paid for now. (well the rtv will be paid off in may) i have 2 full time jobs (equipment operator for the state transportation dept. and my small business) i work on average 12-18 hours per day usually every day, unless the weather gets bad. i had over 200 hrs overtime last year at just my operator job. my small business has paid for all the equipment so far and i am looking to expand with another tractor. i also am a supervisor for my township. i feel i have worked hard for what i got. i think it to be more asthonishing if everyone here would be talking about getting new motorcycles, boats, or rv/campers all the time just for fun stuff. but most are getting equipment for making their WORK easier.:thumbsup:

 

[Fi-Q]

I am 30, new houses, new kids, decents cars..... The car is paid for, the trucks will be paid for soon, the house is far to be paid, it's not even finished yet. I have NO toys at all, I have a big RV toy hauler, but it is to leave in it while working. I have never used it for camping ( I am calling camping going away from home to travel for fun, nothing to do with work) i think I am doing good with my money, i have a good start on my own pension plan, I own 80 acres that is paid for and I put over 100k$ on the house (plus payment) in the last 3 years. I keep telling myself that I need to pay cash for toys (including the eventullay must have tractors) but it seems i always have other priority.

But if I would have bought, let say, a 25k$ tractors 5 years ago, it would be paid for now and I would have it, and I could have easilly have done the paiment, but i spend that money elswhere. And one more payment would have kept me more away from Bars & restaurant. For a lot of people payment is a good discipline.

So will see, i will probably tart with a 5k$ old tractor like a massey 135 and this will kick me in the a** to save to get a newer 4x4 rigs , time will tell, in the mean time, the small loader on my dad bx25 is doing a lot of good things for me

 

[IndyIan]

I wrote a cheque for mine but it was still financed on our line of credit. I sort of a young guy but we don't owe a whole lot on our house any more, and we have no other debt so I bit the bullet on a new one. I'd loved to have bought a used one but it wasn't much more for a new one.
I do wish we bought the tractor years ago now, debt be damned...:laughing: Besides it should pay for its self in driveway snowplowing, and firewood collection and for moving moderate amounts of dirt over the next few decades, and it prevents me from wasting money on cars for the next couple years.

 

[Muhammad]

54.8% of TBN members pay cash for their tractor, and 41.6% finance in one way or another.

 

[kenmac]

I have an old yanmar. But, I paid cash

 

[foreman Etexas]

Probaly not the way it should of been done but I borrowed from my 401k then payed myself back with interest,so it didnt lose anything not being in there. Guess I could save and pay cash but if my wife knew I had that kinda cash,she may need something and i would have to start all over again:laughing:.

 

[kenmac]

There is also a law that says they must give notice before doing so, its not as simple as missing a payment, because with todays "auto payment stuff" it happens.

I would think the fine print (in the contract)would be your notice

 

[rsewill]

I bought a 1999 model last year because it was in my cash price range. For new I would have to do a midnight pickup so no financing or cash would be involved.

 

[LastSTRAW]

My decision to pay cash for my Kioti saved me $4,000. That's almost $8,000 before tax so it would have to be a very high interest rate to make even 0% worthwhile. Right now with interest rates at historic lows, 0% is not the deal it once was. You also save sales tax on the discount which in my case would have been another $600.

You may find that paying cash is worth the discount even if you have to borrow a portion of the money privately.

 

[CJBOTA]

I'm not sure why I do it this way, but I pay about half and finance half. However, I always have the money to pay off my debt if I need to. The real stupid thing I have done is underestimate my needs. This has resulted in three different tractors in 5 years. My dealer has treated me fair, but I know this has cost me money. My interest in farming started as a hobby but has turned into way more. I have gone from a Kubota B, to an L, and last fall to a MX5100. I would bet money that I will get atleast a M7040 within two years. I added an airblast sprayer for my orchard last fall and it takes everything the MX5100 has to run it. I plan to retire from my regular job in about a year and go full time on the farm. We have plenty of land and I just love planting peach trees. I guess I found my calling late in life. My new plan is not to leave my kids a bunch of money, I am going to leave them a job. ( a big dang orchard and probably a big dang tractor) But I'll make sure to leave them enough money to pay off the tractor and cover their first year's operating expenses. After that they are on their own.
CJ

 

[MasseyWV]

I'm not sure why I do it this way, but I pay about half and finance half. However, I always have the money to pay off my debt if I need to.

In the past, I've financed several vehicles this way but always got tired of the payments and paid them off early. They say it hurts your credit when you pay things off early but I will be debt free when I finally pay my house off in less than a year and plan to stay that way afterwards.

Saving money to buy things isn't always easy but I use a method that has worked very well for me. I create a separate savings account and use it solely for the purpose of saving for "whatever" and divert $$$ amount of money out of each paycheck into that account. In effect, I am paying myself a monthly payment, rather than the finance company.

 

[RollingsFarms]

But...

In the fine print there is usually a clause that says something to the effect of "miss a payment and 0% is out the window" which is exactly what the finance company is hoping for.

I've paid on time the past 3 years and 8 months, so I'm well trained to know when to expect the bill. It usually arrives the second Wednesday of every month and Deere is good about sending you your payment about 3 weeks ahead of time anyways. the remaining 4 payments should be no sweat. I have no problem financing certain things, you just have to be responsible enough to keep good records of what is due and when. keep track of when your payment notice arrives for things, know what you have to set aside and there isn't a problem.

 

[wcampbell47]

Probaly not the way it should of been done but I borrowed from my 401k then payed myself back with interest,so it didnt lose anything not being in there. Guess I could save and pay cash but if my wife knew I had that kinda cash,she may need something and i would have to start all over again:laughing:.

I borrowed several times from my 401k paying myself back with interest which turned out to be more $$ for the amount I borrowed than what the invested money returned. At least during the economy in which I borrowed.

 

[crazyangel]

They say it hurts your credit when you pay things off early but I will be debt free when I finally pay my house off in less than a year and plan to stay that way afterwards.

IMHO the thought that paying off debt before the full term hurts a credit rating is perpetuated by the men that want to collect the interest. It is scare tactics to me, and I give it no credence. I am debt free and have an excellent credit rating. In fact, I was considering a short term loan for an investment property recently, and the officer at my bank laughed out loud when I asked about my credit worthiness. She said, "Really? Are you Serious? You have no debt and steady income. We'll give you just about anything you ask for!" I agree that debt in general is to be avoided. Yet, in my circumstances I am also willing to consider short term borrowing if the opportunity outweighs the interest. Just like the cost of interest, I must also consider the cost of a missed opportunity when making my financial decisions. This works for me, but I am not advocating it universally. I respect that everyone has to determine their own personal threshold of financial liability.

 

[MasseyWV]

IMHO the thought that paying off debt before the full term hurts a credit rating is perpetuated by the men that want to collect the interest. It is scare tactics to me, and I give it no credence. I am debt free and have an excellent credit rating. In fact, I was considering a short term loan for an investment property recently, and the officer at my bank laughed out loud when I asked about my credit worthiness. She said, "Really? Are you Serious? You have no debt and steady income. We'll give you just about anything you ask for!" I agree that debt in general is to be avoided. Yet, in my circumstances I am also willing to consider short term borrowing if the opportunity outweighs the interest. Just like the cost of interest, I must also consider the cost of a missed opportunity when making my financial decisions. This works for me, but I am not advocating it universally. I respect that everyone has to determine their own personal threshold of financial liability.

Everyones situation and personal preferences will vary.

Having credit at your fingertips can, and often does, create the possibility of making bad purchase decisions. On the other hand, when one has to save their hard earned money, they are much more likely to give very careful consideration to anything they may purchase with it.

 

[tcartwri]

We paid cash for ours, and I will add that the reason we bought a new machine was because the used machines were priced higher than a brand new one at the time. Plus they all had at least 1000 hours on them.

 

[MasseyWV]

We paid cash for ours, and I will add that the reason we bought a new machine was because the used machines were priced higher than a brand new one at the time. Plus they all had at least 1000 hours on them.

I've been encountering a similar situation myself. Most of the newer used tractors are priced so high that it almost makes more sense to buy a new one. It's a crazy world that we live in.

 

[AKfish]

I couldn't afford to buy a tractor.. any tractor; for many years early in my marriage, kids, college, etc. etc.

I rented 'em! Did what I had to get done and finished the rest with a shovel, rake, ATV and truck.

Bought my first TLB used. Paid cash. Refurbished it and sold it for more than I paid. Kept most of the attachments - tiller, rake, post hole digger, rear blade.

Used the money to pay 1/2 down on my next (new) tractor. Financed it with auto pay thru the bank. Worked just fine. No boogy man at the bank or hacker at the manufacturer crept up behind me and caused me to miss a payment!!!

Paid cash for all my implements, though. They're all used. Baler, disc mower (2), rake, tedder, etc. etc.

Financing a new tractor now. Last one paid off early.

AKfish