Non-dealer financing options

[sleuth]

I'm looking into non-dealership financing options as I would like to stretch the term of my purchase a little longer than the dealer provided 84 month options. I was thinking a 10 year term, since I'm expecting the life of my tractor purchase to be 30+ years. I expect to pay it off early as I pay off almost every loan I've ever gotten early, but I like the flexibility of lower payments during lean months. I was considering using a HELOC to do this, but most of the financial gurus do not recommend making vehicle-type purchases using home equity for various reasons.

I was wondering what other routes of financing y'all have found out there and whether you recommend it?

I do not have a farm (anymore) so I'm not sure if I qualify for agricultural loans.

 

[strantor]

I financed mine through my credit union. It was a personal/signature loan but a special type. Usually those loans are unsecured and have high interest. This one is a secured loan for a non-titled vehicle. Basically "on your honor." I could sell it, cancel the insurance, rent it out, whatever, they would never know.

My credit union did not offer 10yr terms on those kind of loans at the time. 5 years was the best they could do.

 

[Diggin It]

If you 'qualify' (which doesn't take much), AgDirect can be an option:

AgDirect - Equipment Financing

AgDirect® is powered by Farm Credit – committed to serving agriculture and built from the ground up to finance ag equipment.

www.agdirect.com

They only go to 7 years, but I doubt you'll find anything over that anywhere. I think your dealer has to participate with them, but dealers don't always mention them.

 

[crazyal]

For 10 years I think a home equity loan would be your only option. Usually it's hard to beat the interest rates the dealers offer though.

 

[the old grind]

I borrow against shares at my CU vs against a title, get cheap loans for new/used cars, trucks, and tractors. Borrowing from an IRA, 401k, or 403B is another option that doesn't sting too bad.

I got cash price for the tractor I bought new, declined 'free financing' to get a $1600 lower price. (~8% of cost). My thinking was that with interest folded into the payment there would be a higher unpaid balance if I didn't keep for the loan term with interest also yet unpaid and still owed.

IMO any dealer that doesn't offer a lower 'cash price' is leveraging the buyer to take the % deal, where the $$ is either way.

 

[JimR]

I think I got mine thru AGCO. I'll check for you when I get home in a few days. I did use AGCO Finance. They were lower than any bank or credit union around me. Most of them would only give a high rate personal loan as they claimed that they do not give loans on tractors.

 

[MossRoad]

Never, ever, never borrow from your 401k unless you are desperate. There's a whole host of reasons why it should be a last choice.

8 Reasons to Never Borrow From Your 401(k)

Find out why dipping into your 401(k) can have serious consequences.

www.investopedia.com

 

[MossRoad]

Home equity loans are usually higher interest than a tractor loan.

I know you like to pay off early if possible, but also like the flexibility of lower payments in lean times. We did that with our first house, taking a 30 year mortgage vs a 15 year to lower the monthly payments. We paid it off in 5 years, but it was nice knowing we could make the payments if one of us lost our job.

7 years VS 10 years is like 21 VS 30. There's not gonna be that much difference in monthly payments.

Run your numbers and see if an 84 month loan from the dealer at X percent interest payments will really be lower than a 120 month loan at a higher percent. I'm guessing in the long run, you'll pay back more, even though the payments are lower.