Whats the point?

oldgoat2 · Oct 23, 2005

There are several program gimmicks being used to sell products lately. The ones I do not understand are those that require you to borrow their money at 0% in order to get the rebate. The two I have looked into are Kubota's current $500 rebate(credit) only if you buy an L series on their revolving credit card and GM's $3000 rebates only if you financed thrpough GMAC earlier this year. What benefits are these programs to these companies, especially if the customer will pay cash if the rebate would be included?

755inNY · Oct 23, 2005

What benefits are these programs to these companies, especially if the customer will pay cash if the rebate would be included? 

The marketing is directed at the majority of the customers that:
A - Can't pay cash
B - Won't pay-off the loan by the end of the O% period and therefore start paying interest at high rates. In some cases, these zero percent interest deals require you to retroactively pay interest from the beginning if the balance is not paid off.
C - Reduces inventory as most of these deals apply to in-stock items.

In many cases these "deals" are built into the pricing structure for the item. The price was set with the plan to offer some special deal. Everyone likes to think they are getting a discount.

Jeff

thcri · Oct 23, 2005

Alot of the companies that I buy from for resale are that way. Also keep in mind that the dealers do pay for this free financing. We have to pay the different finance companies a per centage of the finance cost. But I always thought GM's and Kubota's were you could either take a rebate allowance or the financing. I did not know you could would get both?? So I am not sure how that works.

murph

bczoom · Oct 23, 2005

( and GM's $3000 rebates only if you financed thrpough GMAC earlier this year. What benefits are these programs to these companies, especially if the customer will pay cash if the rebate would be included? )

GM wouldn't give me the financing rebate ($1500 at the time I purchased) if I paid cash.
I took the financing (and the rebate). When the payment book came in, I paid the whole thing. It cost me about $100 in interest for the month but I still got the remainder ($1400) of the rebate.
As I understand it, like Murph said, the dealer then eats the rebate.

MikePA · Oct 23, 2005

New Hollands deal is 0% for up to 60 months OR cash back. Both vary by equipment purchased. For Boomers, the 0% financing term is 36 months.

Kubota's is $500 AND $0 down and 0%. Deals vary by equipment purchased. For B and L models, the 0% financing term is 24 months.

Deals from both companies are for a limited time (in order to move inventory).

0% financing can be a good deal even for people who can pay cash because they can leave their money in an account earning interest and use New Holland's or Kubota's money to purchase equipment. As with any financial contract, you have to read it before you sign it. Obviously, if someone can not afford the monthly payments at the 0% terms, they shouldn't sign the agreement, instead they should look at a longer term loan.