Thoughts on financing

[fried1765]

Yessir! My dad thought me that a long time ago. At 0%, the money you are paying them a year from now is worth less than it is today! Stretch it OUT!

It is a Kubota, .....let's sell the most tractors possible thing!
Kubota has the psychology of "zero percent interest" thoroughly figured out.
Kubota "Zero percent interest" amounts to simply paying market rate interest, rolled into the overall purchase price, and knowing that the buyer will either not notice,.... or care.

Mother Kubota most likely completely understands the decreasing value of the dollar over time as well.

 

[jyoutz]

It is a Kubota, .....let's sell the most tractors possible thing!
Kubota has the psychology of "zero percent interest" thoroughly figured out.
Kubota "Zero percent interest" amounts to simply paying market rate interest, rolled into the overall purchase price, and knowing that the buyer will either not notice,.... or care.

Mother Kubota most likely completely understands the decreasing value of the dollar over time as well.

You’re probably correct. But since there’s little to no cash discount, it’s a no brainer to take the 0% interest.

 

[fried1765]

You’re probably correct. But since there’s little to no cash discount, it’s a no brainer to take the 0% interest.

Yup....
It is Kubota,...customer be dammed,.....that's the way WE do it.
Take it,..... or leave it!

 

[mcmxi]

They didn’t require insurance, or you simply got a different brand.

I had to get insurance but it didn't have to be KTAC.

 

[jyoutz]

Yup....
It is Kubota,...customer be dammed,.....that's the way WE do it.
Take it,..... or leave it!

Look at it this way. Kubota still offers better value than the green tractor guys.

 

[fried1765]

Look at it this way. Kubota still offers better value than the green tractor guys.

Have never owned, or even priced a green machine, so cannot personally make that comparison.

 

[mcmxi]

Despite those who want to denigrate people for using Kubota financing, it's a good option for many buyers that don't have the cash to pay for a tractor, or who want to use the cash for something else, or who don't want to (or can't) secure a personal loan from a bank. At the end of the day, how you pay for a tractor doesn't mean a whole lot. What is meaningful is how you use, enjoy and maintain the tractor. Those are the memories you'll have until the end.

 

[Sparky Prep]

I considered paying cash for my new Kubota, but with little discount for cash customers, plus 0% financing, where is the downside for financing? I can MAKE money on the money during those 60 months, and just make the payments.

 

[fried1765]

I considered paying cash for my new Kubota, but with little discount for cash customers, plus 0% financing, where is the downside for financing? I can MAKE money on the money during those 60 months, and just make the payments.

The problem here is that Kubota forces their buyers to pay interest when buying a machine, which ever way the buyer opts to actually make the purchase.
Interest is simply baked into the selling price.

 

[rc51stierhoff]

Normally, in captive lending (I believe that is what the 0% deals are that orange uses, but I am not positive about that) the manufacturer isn’t making out on the financing, its on the sale of the product. Normally in those cases there aren’t other deals available as the financing is baked into the price. Manufacturer not loosing money, but the it does get people into the dealer and in many cases it makes buying new a better value versus buying used. It’s good for the manufacturer to create sales / buy opportunity and to make good opportunity for the buyer that doesn’t have to use all their cash. Why would one want to pay cash when the dollar is continually being devalued and inflation is increasing?

 

[fried1765]

Normally, in captive lending (I believe that is what the 0% deals are that orange uses, but I am not positive about that) the manufacturer isn’t making out on the financing, its on the sale of the product. Normally in those cases there aren’t other deals available as the financing is baked into the price. Manufacturer not loosing money, but the it does get people into the dealer and in many cases it makes buying new a better value versus buying used. It’s good for the manufacturer to create sales / buy opportunity and to make good opportunity for the buyer that doesn’t have to use all their cash. Why would one want to pay cash when the dollar is continually being devalued and inflation is increasing?

A good summation of the Kubota financing scheme.

 

[Elliott in GA]

Many of you might be missing the value of Kubota's 0%. It may add to the price of the tractor, but that percentage is very small in comparison to the interest rate an individual would get on the open market. A large corporation like Kubota borrows money at very low rates - that is why the cash discount is not very much. The cash discount would be greater if Kubota paid what would be prevailing individual or small company rates.

Is Kubota making some extra money off the 0% - probably not very much, and most of the profit is in the form of additional sales, not some price mark up to account for the 0%.

Messick's had a video about KTAC insurance. In that video, the profit for the selling dealership was $50, and it was related that Kubota operates/contracts KTAC in a revenue neutral manner. Kubota simply sees it as a way to assist financing to gain greater sales (the real source of revenue). I would expect the 0% functions in much the same way.

 

[GreensvilleJay]

re: where is the downside for financing?

You don't OWN the tractor until it's paid off, It's a finanacial liability until it's paid off.
IF you finance it, then lose your job, can't pay the monthly, you could lose your tracto.
if you lose your job , need a 2nd house mortage, may not get it as you owe $xxxxx on the tractor.

 

[The Evil Twin]

Yup....
It is Kubota,...customer be dammed,.....that's the way WE do it.
Take it,..... or leave it!

Not sure why you think its a Kubota thing. Same as all the other major brands. Deere has 0, Cub does, Husky too. More i am sure. K isn't special.

 

[D2Cat]

re: where is the downside for financing?

You don't OWN the tractor until it's paid off, It's a finanacial liability until it's paid off.
IF you finance it, then lose your job, can't pay the monthly, you could lose your tracto.
if you lose your job , need a 2nd house mortage, may not get it as you owe $xxxxx on the tractor.

What if you don't need a 2nd mortgage, don't have a job, and don't have monthly payment.... still finance it?

 

[KKBL]

Online banks are now offering up to 4.25% on savings accounts. If you have the money now, and can't get any deal by paying cash for a new Kubota, you could just put the money into savings and have it available to pay off the equipment anytime if you need to.

 

[PaulL]

Kubota may be borrowing in Japan. On the day they write the policy, they bundle it all up, and finance at about 0.5% in Japan. The Japanese financiers think that's a great deal, they're used to negative interest rates.

Kubota is happy to finance against a Kubota tractor, they know the resale. And you have to get KTAC, so they know if you break it they'll get it fixed or replaced. So for them it's safe security. For the average bank, it's bad security, they don't particularly value a Kubota tractor as security.

So overall you get a way better deal than you'd get financing somewhere else.

 

[CAPT Seabee]

I did the 5 year 0% thing in January for last year's prices. Kubota Insurance is way overpriced as you can get Travelers for about 1/3rd the cost. Kubota requires insurance to protect their interest, not yours. My financial advisor ran the numbers for every way I could do it and said the 0% was the no brainer. Any money I keep in the financial house has been reliably making 7%/year (5% recently due to Bandon.

 

[Sparky Prep]

The problem here is that Kubota forces their buyers to pay interest when buying a machine, which ever way the buyer opts to actually make the purchase.
Interest is simply baked into the selling price.

Oh, I realize that I am still paying the interest. BUT, with the scheme that Kubota is running, there is no way to avoid it. I am stuck playing by the rules Kubota set. So, there is no downside to financing.

 

[Sparky Prep]

re: where is the downside for financing?

You don't OWN the tractor until it's paid off, It's a finanacial liability until it's paid off.
IF you finance it, then lose your job, can't pay the monthly, you could lose your tracto.
if you lose your job , need a 2nd house mortage, may not get it as you owe $xxxxx on the tractor.

I have.enough cash in the bank to buy 5 of these tractors. So no, there is no financial liability. If I were to lose my job, I would just pay off the tractor, and then decide if it would be financially advantageous to sell the tractor for possibly more than I bought it for.