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Super Member
It makes no sense at all.
You already paid the interest within the price of the commodity which I'm quite sure you have no idea what that interest rate really was.
TYM T474 vs John Deere 4044M
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You already paid the interest within the price of the commodity which I'm quite sure you have no idea what that interest rate really was.
Hozzie
Silver Member
I will explain exactly based on my recent purchase of a M7060 cab with selected options.
For me specifically, I received prices for cash and 0% financing. The price difference was $700 more for 0%. I will use whole numbers rounded to the nearest thousand to make this easy. My purchase price at 0% was $54,000. I paid a down payment of 5k so they would change an existing order to my specs to I get it sooner. I told them I would borrow 45k as I like round numbers and I will pay it down to that.
I could simply pay cash, but I can pretty easily get 7% return on that cash as an investment. Over 5 years, that same 45k will net me 18k in profits while I only paid $700 to get the 0%. If I had not taken the 0%, and went with 1.9% financing, I would have paid 2.2k in interest over that same 5 years.
So all in, I will net 17k by taking their 0%. Seems like a pretty smart decision to me. Maybe everyone can't do that, but making blanket statements about 0% being dumb doesn't fly. Everyone's circumstances are different and there are plenty of people who can figure out if it makes sense.
Or pay the full price in cash and lose the investment it could return. For me, that's dumb.
jyoutz
Super Member
Not true. Dealers do not give very much cash discount on the price of a new tractor. I was offered a $1100 cash discount on a $40k tractor if I paid cash. I went with the 0% for 72 months and paid the extra $1100. I found this to be true with the 4 dealers I got quotes from (in 3 different states). Tractor dealers aren’t offering much discount for cash. Where the Kubota dealers make up for the 0 interest is in the Ktac insurance that is required for financing. But it’s good insurance so I’m ok with the $75/month that it costs.
Hozzie
Silver Member
You don't have to use KTAC, but you do have to show proof of insurance. I use my local Farm Bureau for a lot less cost than what they quoted me for KTAC.
CADplans
Elite Member
I was wondering about WHY Honda offered me 0% financing on my last two car purchases,,
THEN, I happened to see an article that explained why Honda DID NOT WANT PAID right away.
It turns out, that they were betting on a change in the exchange rate as the reason for offering 0%.
By being paid in future dollars, and moving that money at the future exchange rate,, Honda made BIG money.
The 0% financing benefited me, the loan repayment in future dollars benefited Honda.
IT was a WIN-WIN.
So, yes, there are gray areas, not all financial transactions are black, or white,,,
Something similar had to have happened in 2018 when I bought my Alaskan,,
I got a significant discount,, AND 0% financing. I can see no other explanation.
My final cost for my 2018 2500 Chevy was less than I paid for my 1999 2500 Chevy,
that is actual dollars, not inflated dollars, or some such thing.
jyoutz
Super Member
I know, but I think that the Ktac is worth the extra money. Any accidents with the tractor and $250 fixes it.
Cougsfan
Veteran Member
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- Ferguson TO35, Branson 4720CH
It might be just me, but I can think of at least a half a dozen tractors I would buy before buying a JD compact tractor in any size range. They are drastically overpriced and not a bit better nor more reliable, more comfortable or more functional than their many competitors.
People keep talking about the high resale value of the JD over other less expensive brands. That has been shown in this forum repeatedly to be faulty logic. Research it and you would find that you take a fairly equal percentage of devaluation over the original purchase price of most any tractor you buy. Simple math logic tells you that a more expensive tractor to fill the same need of a less expensive tractor, both with the same ratio of depreciation is not a financial advantage at all for the expensive tractor. Over the lifespan of your ownership of the tractor, the expensive one will still be more expensive.
As far as "buying American" goes, there isn't that much difference of how many of your purchase dollars stay in the US with any brand of compact utility tractor you buy, despite whose flag they claim to wave.
People keep talking about the high resale value of the JD over other less expensive brands. That has been shown in this forum repeatedly to be faulty logic. Research it and you would find that you take a fairly equal percentage of devaluation over the original purchase price of most any tractor you buy. Simple math logic tells you that a more expensive tractor to fill the same need of a less expensive tractor, both with the same ratio of depreciation is not a financial advantage at all for the expensive tractor. Over the lifespan of your ownership of the tractor, the expensive one will still be more expensive.
As far as "buying American" goes, there isn't that much difference of how many of your purchase dollars stay in the US with any brand of compact utility tractor you buy, despite whose flag they claim to wave.
plastikosmd
Veteran Member
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- Aug 6, 2006
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My opinion differs but that is why they are called “opinions”
But as stated, I only had 2 local dealers of machines and one wasn’t a great experience
Moreover, the price differential between what is considered as the “top 2” was equivalent (shocking)
But as stated, I only had 2 local dealers of machines and one wasn’t a great experience
Moreover, the price differential between what is considered as the “top 2” was equivalent (shocking)
arrow
Super Member
I am not arguing cash vs financing. nor what your money returns.
I am talking about the fallacy of 0% financing. Everyone IS paying interest on 0%.
To use round numbers, if a machine would normally go for 45K, once the 0% is conjured by the manufacture, the msrp for that machine can raise to anything they deem fit as a return on their loan.
If they add 6K more, that machine is now priced at 51K. Anything you pay on this amount no matter how you work it down, will be based on the 51K.
Cash "price" is again dictated by the manufacture and they can make that number anything they wish to make the 0% appealing.
Just tell me what the price for the commodity is w/o the 0% crap and that "real number" is never gonna happen anymore because there is too much to gain for the 0% scam for the manufacturer.
It is an "illusion" at best.
arrow
Super Member
There are no "grays" in the aspect of borrowing for time. You always "pay".I was wondering about WHY Honda offered me 0% financing on my last two car purchases,,
THEN, I happened to see an article that explained why Honda DID NOT WANT PAID right away.
It turns out, that they were betting on a change in the exchange rate as the reason for offering 0%.
By being paid in future dollars, and moving that money at the future exchange rate,, Honda made BIG money.
The 0% financing benefited me, the loan repayment in future dollars benefited Honda.
IT was a WIN-WIN.
So, yes, there are gray areas, not all financial transactions are black, or white,,,
Something similar had to have happened in 2018 when I bought my Alaskan,,
I got a significant discount,, AND 0% financing. I can see no other explanation.
My final cost for my 2018 2500 Chevy was less than I paid for my 1999 2500 Chevy,
that is actual dollars, not inflated dollars, or some such thing.
It only appears that it is a win-win and that is exactly what they're after.