To finance or not to finance ...

[jdom84]

Financial numbers can be presented 3 ways; my way, your way and the truth. Beyond representation of those numbers, you have to ask what do you want out of life? If you have your bases covered financially, do what makes you happy. Don't think that at a later age in life that you'll be in the same health to do what you can today. I've watched family members go down hill in their health with regrets for not seizing what they should have when they were younger whether it be traveling, missed opportunities, etc. I'm 43 now and just bought a 93 acre "hobby" farm and a new tractor. The tractor was financed at 0% for 60 months. I recognize the realities of financing. However, I have my financial obligations covered and for me, it was living out a dream. Should times get hard, I can liquidate and still have been able to enjoy a bucket list item.

Exactly! and dont forget.... you are not guaranteed tomorrow. How many people build up their retirement accounts with the hopes of living free at retirement age but then die before or shortly after? My current work forced me to do a retirement account and now after many years its got some money in it. Come January 1st I am quitting my job, moving, cashing out my retirement (taking the penalty) and buying a small hobby farm... just not 93 acres . May not be the smartest thing to do... but not having monthly payments on stuff while young and able to live sure feels like freedom!

And when I'm ready to retire, ill sell the place to live out the rest of my life.

 

[jonsstihl]

I don't know about US practices but kubota canada has a 3000$ cash discount on the grand l 3560 and if you opt for the 6060 and pay cash you get 4000$ off instead of the "0%" financing. that is on top of 1500 dealer discount 500$ special discount 500$ loader discount and a 500$ local fair discount.
these are 2017 prices but a grand L3560 would cost 49100$ with a loader and cab. after discounts and cash it would end up at 43100$

a 6060 starts at 65450 and would end up at 57,950$

your 0% financing would cost you between 3 and 4 thousand. now for the used markets I can find many used 6060's with cabs and loaders for around 45,000$ advertised price with anywhere from 600 to 1500 hrs and 2013-2015 models.

dont forget these are canadian dollars so subtract roughly 30%

 

[rt014]

My Kubota was the same price cash vs 0% financing. So I 0% financed for many of the reasons stated above.

Kubota makes money on:
a) the loan fee
b) the insurance
c) defaults (i.e., repossessions)
d) it smoothes out their cashflow (not really a money maker but they can forecast their earnings more predictably)

 

[daugen]

remember that if you finance, you usually have to purchase insurance to cover the bank's interest, and then yours secondarily.
KTAC does a fine job for Kubota. You are getting a benefit for the price paid, but it's still an additional cost where if the owner does not go off property or use the tractor in business, there really is no need to have extra insurance, your homeowner's policy usually is quite adequate to handle the risk. Just make sure that rolling your tractor on a hill would be covered by your homeowners. Sometimes those all risk policies are worth their weight in gold, particularly if you do something risky with your equipment. And if you trailer your tractor, you need the coverage anyway.

So much of this is hard to comment on because there are a lot of variables that remain unanswered, the big picture for the OP.
I'm a retired CFP and family financial doctor of sorts, and for sure you have to look at finances at both the forest and the individual tree level.
0 percent financing still is likely to be the best deal you are going to get on a new tractor, particularly with rising interest rates.
I believe it was Warren Buffet who said fairly recently that expecting more than 5 percent on your money isn't likely long term.

We need to remember only ten years ago when things got ugly in the investing world. Really ugly. Takes a long time to recover losing a third of your money. I only use 5 percent in my planning btw. Hope for 7, plan for 5, do a little dance at 9. We've been dancing a lot lately but the
political band could easily shut it down soon.

If you can afford a new or used tractor, you should buy it. Zero percent financing is fine unless you can get a big cash rebate otherwise.
But if you have to worry about whether you can afford it, you probably can't. Never jam yourself up with fixed expenses.
Not great when the party ends.

 

[4570Man]

The manufacturer 0 percent probably isn’t exactly that but it’s a pretty low rate. It’s in their best interest to make it as an appealing option as possible.

 

[Rock Crawler]

The manufacturer 0 percent probably isn’t exactly that but it’s a pretty low rate. It’s in their best interest to make it as an appealing option as possible.

Yep, it's pretty much 0%.

Not much to argue about there.

No jacked up price if financing. No exceptional charges other than the $75 fee for clerical loan processing.
No reduction in promotions if financed or financed at 0%.
No games or gimmicks in the payment plan.

Kubota isn't pulling any underhanded moves. It is exactly what they say. Manufacturer backed financing at 0% in an effort to move more product.

Attached is my own personal loan data pages on the Kubota financial site from my February 2018 $33,000(ish) purchase of a fully loaded B2650 TLB.

 

[RSR]

Yep, it's pretty much 0%.

Not much to argue about there.

No jacked up price if financing. No exceptional charges other than the $75 fee for clerical loan processing.
No reduction in promotions if financed or financed at 0%.
No games or gimmicks in the payment plan.

Kubota isn't pulling any underhanded moves. It is exactly what they say. Manufacturer backed financing at 0% in an effort to move more product.

Attached is my own personal loan data pages on the Kubota financial site from my February 2018 $33,000(ish) purchase of a fully loaded B2650 TLB.

View attachment 571901View attachment 571902View attachment 571903

???

Kubota's website currently shows the following rebates in lieu of 0% financing:

B2650: $400
B3350: $900
All L01 models: $500
All L60 models: $700

That sure sounds like a financing charge to me, just with a different name.

 

[atsah]

There is no way tractor company's would be in business if they didn't offer very low or 0% for a LONG term at that. 70% of the people that buy new tractors finance them.

I can't remember what AGCO offered me at the time, I'm thinking 1.9% or something like that, I said no and paid for it and I'm glad I did.. I'm the kinda guy that likes to go to the store, gas station or wherever, buy what I need with cash, I can forget about it when I leave and never have to think about it again. When you buy things with credit everyone knows what you bought, when you bought it, where you bought it and knows what else and then I have to look at it again when the bill comes, it's not for me..

 

[coobie]

???

Kubota's website currently shows the following rebates in lieu of 0% financing:

B2650: $400
B3350: $900
All L01 models: $500
All L60 models: $700

That sure sounds like a financing charge to me, just with a different name.

AGAIN,if you have a plan of financing WHY keep beating a dead horse?Buy a tractor and move on.Just curious????????

 

[Rock Crawler]

???

Kubota's website currently shows the following rebates in lieu of 0% financing:

B2650: $400
B3350: $900
All L01 models: $500
All L60 models: $700

That sure sounds like a financing charge to me, just with a different name.

So your saying that today if I were to go buy a copy of my nearly $33,000 B2650 that I have to pick between a $400 rebate with some amount of interest or a 0% / 84 month finance option.

Now, I'm not the sharpest knife in the drawer... but 400/33000 is a 1.2% cash rebate. Assume that you take that and they finance you at 1.9%. Compounded. Holy crap batman! Talk about epic bad decisions!

Or you pay cash to save that awesome $400/1.2% that your so up in arms about. The financial loss if pulling $33,000 out of play for 84 months is going to be MASSIVE.

Anyone with a mild concept of finances would say that you have to take that 0% and forget about that $400 joke. Even if you have the $33,000 times 100 in your liquid portfolio, you would be an utter fool to take it out if play and apply it to this purchase.

That said, I see your $400 that you're showing. That did not exist in any way, shape or form in 2017 and quarter 1 of 2018 when I was making these choices. I looked at MF, Kioti, LS and Mahindra and all of them counted the rebate variance between cash deals and 0% deals in the thousands of dollars. Kubota was the only beacon of light calling to you with no penalty for choosing cash, 0% or whatever... prices at the bottom of the invoice were the same now matter how you decided to get it bought.

Maybe Kubota is changing that, but that $400 is an insignificant and meaningless amount on this size of purchase.

Don't get wrapped around the axle over pennies.