The financing game - what's the real deal?

[OldGinTractors]

The nice thing about Mahindra's financing is they give you that 84 month option to keep your payments within your budget. Every deal we figure @ 0% for 84 months will be the lowest price if you pay out the contract if full, but that said it may only be minimal ( couple of hundred) over the rock bottom pricing with a low rate interest contract. If your the type person that pays off early don't go with the 0%. You should have your dealer laid out all the options for you to choose and if they won't do that look for another dealer that will. The 0% can be very attactive if your buying lots of attachments because the buy down is a set price depending on the tractor model, so the more Mahindra branded attachments you buy the sweeter the deal.

 

[CaptainJackSparrow]

The dealer figured mine at 2.99% for 60 months, 3.99% for 72 months, and 0% for 72 months. I chose the 0% for 72 months. The payment was the lowest, and the final price of the tractor at the end of the loan was almost the same as the 2.99% for 60. A few dollars more I think. When I asked about the 0% financing, he told me up front there would be a price increase and told me what it was.

 

[architect]

as I posted in another thread:

my price was for eMax 25 with FEL, Backhoe, Thumb, 12" bucket msrp 60" MMM $25,205.
Cash price $23,189 -$600 -$1000 = $21,589.
Rock Bottom Pricing $23,189. - $1000 = $22,189
2.99%/ 60 mo. $399 = $23,940 w/o early payment
3.99%/ 72 mo. $347 = $24,984
3.99%/ 84 mo. $303 = $25,452
Value Pricing
$23,189 0%/ 60 mo. = $386 = $23,189
$23,389 0%/ 72 mo. = $325 = $23,389
$23,689 0%/ 84 mo. = $282 = $23,689
NO TAX in numbers

If you are just looking for low payment 0% for 84 mo. is best, but cost is $2100 more than Cash, the cost for LOW rate financing is actually More and as numbers show 2.99% for 60 mo. is still more than 0% for 84 mo., yes you could make early payments and pay less, but I was also looking at lowest payment.
What will it cost to build addition to house we own to put our Office there and stop paying rent, what about an addition to the house to add a first floor Master Bedroom, getting older and steps are no fun. What I do know is that Business is poor for the last few years because of Government policies and most money is parked in Stock Market waiting it out, 2014 and 2016 will be important, if economy improves I have only spent $2100 over cash option to get eMax, still will have three houses to take care of (mine, Office/house and we had to buy mother-in-laws house) AND I know my payment will be $300. If economy improves, payed the price, if not lowest cost to make ends meet, as I retire.

 

[tcartwri]

Well I don't want to be captain obvious, but the 0% deals are just to make you feel good and get you in the door. Their margin is already worked into the msrp number that you start your negotiations from. Same with the car dealers. And I have to laugh out loud when they trot out their invoice sheet to show you what they paid.. Amazing how eager they are to show you that number.

At work I'm in a position to see what we pay on fleet purchases for vehicles. I can tell you that the invoice number that the dealer shows you is no where near what they paid for the vehicle.

 

[whizdbiz2]

And I have to laugh out loud when they trot out their invoice sheet to show you what they paid.. Amazing how eager they are to show you that number.

At work I'm in a position to see what we pay on fleet purchases for vehicles. I can tell you that the invoice number that the dealer shows you is no where near what they paid for the vehicle.

What kind of number are we talking below invoice do they actually pay? What is the invoice they show you, a fantasy to make you feel good? Always suspected something when they are so eager to trot out the "invoice".

On my eMax22 I went with the 2.99% at 60 months with a down payment. I'm still working, have about 6 yrs. to go to retirement but plan to pay it off sooner. My payment is over $100 less/month then the car I just paid off so will be paying more on it than the minimum. Dealer was very up front about all the price and finance options and actually didn't suggest the 0% unless I was looking at strictly the lowest payment. If I had the cash (all of it) would have gone with the cash price. Don't care for debt after having been through this last recession (is it really over?) and having seen what it did to people who lost a job. If paid off they can't come and take it away.

 

[tcartwri]

For example on 4x4 gas trucks with a decent amount of options, we are paying mid to high twenties. Rental fleets get the same deal. That's why you can get one year old ex-rental fleet vehicles for 50% less than a brand new one from the dealer.

 

[ameador1]

Well I don't want to be captain obvious, but the 0% deals are just to make you feel good and get you in the door. Their margin is already worked into the msrp number that you start your negotiations from. Same with the car dealers. And I have to laugh out loud when they trot out their invoice sheet to show you what they paid.. Amazing how eager they are to show you that number.

At work I'm in a position to see what we pay on fleet purchases for vehicles. I can tell you that the invoice number that the dealer shows you is no where near what they paid for the vehicle.

I used to own a computer company. The manufacturers usually gave an MSRP number on their products. I bought through wholesale distributors - who never sold anywhere near MSRP. The manufacturer made their profit when they sold the items to the distributors. The wholesalers made their profit when they sold it to me. I could then sell to my customer well below MSRP and make a profit. By the time I sold the products - the manufacturers where not involved in my business in any way. They only provided warranty on the products. If I negotiated my price - my invoice price was my real cost (not counting overhead).
I have never understood the sells process of car dealers and now tractor dealers. If the tractor manufacturer sells the tractors to the dealers and then the dealers sell it to the end users, then the manufacturer already made their profits. If the dealer is coming up with different sales prices based on finance options, it seems like they are just trying to get more profit from the sale price because you're getting a better finance option. Because they know you're paying less per month, they can jack the price on the machine a still keep you in the deal so long as you can afford the monthly payment. Why would the manufacturers credit line offering change anything when they made profit on the initial sell to the dealer? I'm sure I'm not understanding theirs processes right from your explanation, but like I said - I've never know exactly how they work to make sense of their tactics - which I assume is the point to some extent. The interactions between manufacturer and dealer are obviously very different than other kinds of resell processes.

 

[Browneyesvictim]

I would echo what everyone else is saying. When all was said and done on the paperwork, it did in fact show including the finance charge (4.25% interest) for the full 84 months, but they just took that total amount in a reduction off the purchased price.

Just to give you another point of reference... given there is no sales tax in Oregon, but I did put a good down payment, so my payment is under $175 per month (84 months) on a Max 25 with MMM, FEL and Brushog.

 

[DavesTractor]

There is no free lunch, and that should not be a surprise. Some things are "included", but not free. It feels better if you get a discount for not using 0% as opposed to getting charged for using 0%. But in any event, the cost of money is always packed into the item.

A person just needs to do the math. The 0% cost that is added onto the tractor is generally the average cost of that money based on a tractor with a loader. So it is a trade off. But if you include a backhoe, the 0% generally saves you money. For example, if a certain package costs $1500 more at zero percent and if you were to buy it at 3.99% the interest would cost $1500, you did nothing but swap dollars. But if you add a backhoe and the 0% cost does not go up (because it doesn't) it compares favorably at that point to 3.99% because at that rate with a backhoe your interest cost might total $1800.

A person needs to look at their cash flow, available down payment, etc., and then get a little loan calculator app and start crunching the numbers.

 

[ameador1]

There is no free lunch, and that should not be a surprise. Some things are "included", but not free. It feels better if you get a discount for not using 0% as opposed to getting charged for using 0%. But in any event, the cost of money is always packed into the item.

A person just needs to do the math. The 0% cost that is added onto the tractor is generally the average cost of that money based on a tractor with a loader. So it is a trade off. But if you include a backhoe, the 0% generally saves you money. For example, if a certain package costs $1500 more at zero percent and if you were to buy it at 3.99% the interest would cost $1500, you did nothing but swap dollars. But if you add a backhoe and the 0% cost does not go up (because it doesn't) it compares favorably at that point to 3.99% because at that rate with a backhoe your interest cost might total $1800.

A person needs to look at their cash flow, available down payment, etc., and then get a little loan calculator app and start crunching the numbers.

I agree to some point - except the swapping dollars. If you finance that $1500 fee into the base amount financed at 0%, then you can do nothing to reduce it. But if you finance at 2.99% without the fee and can pay extra at some point - you can eliminate some of that $1500. The prices I'm getting right now for a 3616 HST w/ FEL and Backhoe are: $24475 cash price, $25275 2.99%/84, and $27925 0%/84 month price (a $3450 variance in price). AgDirect is doing 4.75% up to 84 months on new equipment. With $2000 down (in all scenarios), this makes monthly payments of $315 (cash w/ AgDirect), $307 (2.99%/84), and $309 (0%/84). So they are very similar. But with the 2.99%/84 month - that is the best monthly payment and you have the potential to get rid of interest with extra payments or higher monthly payments. I agree with you on this - RUN THE NUMBERS!
It's a frustrating matter of pinning them down on every little price and financing variant to come up with what is truly in your best interest. I have 3 dealers right now that I'm working with to get comparables. There are differences in the prices they are giving me by a few hundred to a thousand dollars or so and they are consistent about the different financing variants. So now I'm paying attention to overall cost, monthly payment amounts, and the customer service aspects (two of them are standing out over 3rd so far).