Cash vs financing
- Thread starter Pburchett
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85Hokie
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Equipment
BX-25D ,PTB. Under Armor, '90&'92-B7100HST's, '06 BX1850 FEL
"To me... If the rate is low... why use your own money ????? And when it's 0%... its just STUPID to use your own money."
better words have NOT be spoken.......well said brother - well said!
I tried to explain to some young people on several occasions about the positives of an equity line on their house.......
they said that they didnt want to open a line of credit, cause they didnt want to have to pay more bills.........
yet they had credit cards at 10% plus......
even explaining to them the rate <4% and taking off their taxes the interest..........still could not wrap there head around it......and the equity line was FREEEEEEEE...............
NOW - after 5 years......they both have one!
this is much the same concept .............IF YOU have the money in hand(bank) - leave it there !!!! HELL use it to make the payments, orrrrrr - leave it there and draw interest.....orrrrrr use it on a rainy day when your wife's transmission needs repair, or college payments, or that new gun you will want when whats her face gets elected. Money in hand beats the hell out of money spent!
better words have NOT be spoken.......well said brother - well said!
I tried to explain to some young people on several occasions about the positives of an equity line on their house.......
they said that they didnt want to open a line of credit, cause they didnt want to have to pay more bills.........
yet they had credit cards at 10% plus......
even explaining to them the rate <4% and taking off their taxes the interest..........still could not wrap there head around it......and the equity line was FREEEEEEEE...............
NOW - after 5 years......they both have one!
this is much the same concept .............IF YOU have the money in hand(bank) - leave it there !!!! HELL use it to make the payments, orrrrrr - leave it there and draw interest.....orrrrrr use it on a rainy day when your wife's transmission needs repair, or college payments, or that new gun you will want when whats her face gets elected. Money in hand beats the hell out of money spent!
One of the worst habits to get into is borrowing to buy. Avoid indebtedness like the plague. If it means purchasing less and less often; so be it. Save your money and purchase outright when you can. Only then is it truly yours.
Off the soapbox now.
Regards,
Clay
Off the soapbox now.
Regards,
Clay
There was a time in the past I wanted to possibly buy some equipment. I talked to the VP at the bank. I was advised to get a home equity loan. At that time is cost about $100 to do all the paperwork. But I would have access to WAY more money then I intended to spend.
I declined the proposal because our house was paid for. I did not want to risk any problems with a decision on a piece of equipment verses having a home to live in.
A few years latter the economy tanked. Values went down.
If someone barrows against their home they are risking the equity that exist for the ownership of depreciating items.
I agree with Clay45. It comes to the idea of "Discipline yourself so others won't have to".
I declined the proposal because our house was paid for. I did not want to risk any problems with a decision on a piece of equipment verses having a home to live in.
A few years latter the economy tanked. Values went down.
If someone barrows against their home they are risking the equity that exist for the ownership of depreciating items.
I agree with Clay45. It comes to the idea of "Discipline yourself so others won't have to".
"To me... If the rate is low... why use your own money ????? And when it's 0%... its just STUPID to use your own money."
In general that may be true but you need to look at the circumstances. Let's say you want to buy a B model with 0% financing. Well you give up a $500 rebate to start with. But then you can say that over the 60 month term you would earn more than that $500 in interest - even at today's paltry rates.
That may be true but what about the insurance that Kubota requires if you finance it. That will add a couple hundred per year to your cost so in the end it may very well cost you more in the long run to finance.
While my homeowners insurance will cover the tractor my insurance company said that the finance company may not accept that since Kubota would need to be on the title and I might need their own insurance.
Has anyone financed a tractor thru Kubota and had Kubota accept their homeowners insurance?
In general that may be true but you need to look at the circumstances. Let's say you want to buy a B model with 0% financing. Well you give up a $500 rebate to start with. But then you can say that over the 60 month term you would earn more than that $500 in interest - even at today's paltry rates.
That may be true but what about the insurance that Kubota requires if you finance it. That will add a couple hundred per year to your cost so in the end it may very well cost you more in the long run to finance.
While my homeowners insurance will cover the tractor my insurance company said that the finance company may not accept that since Kubota would need to be on the title and I might need their own insurance.
Has anyone financed a tractor thru Kubota and had Kubota accept their homeowners insurance?
Yes. You just sign a form that says you promise to carry insurance. I didn't have to prove I had it at all. I just bought a B2650 in October. I compared Kubota insurance with a policy from my insurance company. My homeowners would cover it on my property but I take it down the road periodically to my hunting spot so they suggested a specific policy just for the tractor. It is a recreational vehicle policy that covers the tractor anywhere and also comes with a liability component if I were to hit a car or building etc. My policy cost me $126.00 for the year. I think Kubota insurance was around $150 and Kubota insurance only covers the asset for the loan.
It was a better deal for me to get my own insurance.
John
We have a $25 per year rider the insures the tractor and all implements up to $26,000 with Kubota listed as the payee in the event of loss. Tractor is insured against theft and damage.
Its basically covered under our homeowners.
Thats certainly true if you can not afford to outright purchase whatever it is you want to buy. But if you do have the cash, there is 0 financial sense in tying up your cash to purchase something when it will cost you $0 to spread that cost out over X number of years. All assuming 0% interest.
Yeah, I have a $307 payment every month. I can put the equivalent of what I paid for the tractor in a simple interest bearing savings account, make the payments from that account and have the tractor paid off with money left over in the account.
Its one thing to be able to pay cash for things you want. Its something entirely different to be smart about making your cash work for you.
Almost every tractor I have ever bought has been used, cash on the barrel head... I guess I'm just an old fossil, but I bet I have more tractors than most, here. I was taught, that If you don't have the money, wait and save, and it will be worth a lot more to you...
I'll weigh in on the cash vs financing too.
I am very disciplined with my spending. I haven't had a vehicle payment in over 10 years personally or in the business I own. I haven't carried credit card balance for longer that that but I will use my business card all of the time. We just pay it off each month.
I bought a new tractor last fall. I had sold my previous tractor and had saved up the difference so I was going to pay all cash. When push came to shove, there was no benefit to paying cash. I got 100% financing for 5 years at 0% at the lower price that I negotiated. I did pay a doc fee of $20.00 that I guess I wouldn't have paid with cash but I'll live with that. That money is now earning interest where I wouldn't have gotten any before. For me, this was a good deal.
I agree that financing everything is a road to disaster but it is mostly the person taking out the loan. You tend to spend more money and do it more often if you don't feel the pain of the money leaving your hands. It's easy to get wrapped up in the bigger tractor fever and add several new implements and before you know it you spent $5000 more than you had planned on. I went into the buying process knowing what I wanted and the one new implement I was going to add. I made the best deal I could on that combination and didn't get swayed by options and extras and shiny new implements. As I said, it takes discipline.
John
I am very disciplined with my spending. I haven't had a vehicle payment in over 10 years personally or in the business I own. I haven't carried credit card balance for longer that that but I will use my business card all of the time. We just pay it off each month.
I bought a new tractor last fall. I had sold my previous tractor and had saved up the difference so I was going to pay all cash. When push came to shove, there was no benefit to paying cash. I got 100% financing for 5 years at 0% at the lower price that I negotiated. I did pay a doc fee of $20.00 that I guess I wouldn't have paid with cash but I'll live with that. That money is now earning interest where I wouldn't have gotten any before. For me, this was a good deal.
I agree that financing everything is a road to disaster but it is mostly the person taking out the loan. You tend to spend more money and do it more often if you don't feel the pain of the money leaving your hands. It's easy to get wrapped up in the bigger tractor fever and add several new implements and before you know it you spent $5000 more than you had planned on. I went into the buying process knowing what I wanted and the one new implement I was going to add. I made the best deal I could on that combination and didn't get swayed by options and extras and shiny new implements. As I said, it takes discipline.
John