Should you buy a tractor with 0% financing?

The "Low Rate" promotional financing advertised by tractor manufacturers might not be the best deal for you.
As a salesperson with 20 years of experience, I've helped THOUSANDS of people apply for financing on many types of machines. There's a few things everyone should know when they are buying a tractor or other piece of outdoor power equipment and considering financing.
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[@javabean215]

Only in America can a bearded guy in Carhart overalls legitimately explain purchasing tractors using credit. I love this country! Nice job, Micah!

[@HomesteadBandwagon]

My Liderhosen were in the wash

[@OklahomaRedneck918]

I think if anyone was to be knowledgeable on that subject it would be farmers as they are the ones buying some of the most expensive things

[@georgefair3244]

Thank You for explaining this in the easiest way possible. Take care.

[@user-vd8ns5ox4p]

first time watching this gentleman, well done, very informative

[@HomesteadBandwagon]

Welcome aboard!

[@marshallbeckawilliamson1458]

Really appreciate your knowledge, common sense, and fairness! Thank you for doing these videos and helping us understand the process!

[@TimmyMoza]

Im 2 years into a 4 year zero percent on Kubota M4 and L3901 and z724…. Went all in on em and couldnt be happier using someone elses money… it made sense at the time and still does. Especially when they add insurance coverage on the machines while being financed… Even tho its probably a bit overpriced it still made sense in these financially unstable times…

[@randymcnealy8276]

Sweet!! Thank you. Excellent presentation of valid information.

[@marklarson9436]

There is an opportunity cost that wasn't factored in the math. What ROI can your $20,000 in cash make over the 84 months? That has to be factored. New subscriber and new LS MT125 owner. Keep up the good work!

[@madcowusa4277]

About $83/month @ current 5% interest with a Fidelity cash account, $7,000 lost interest over 84 months, more factoring compounding or are willing to keep rolling over 1 year CDs currently @ 5.2%. I'm currently going through this dilemma with a Kubota.

[@ScottRoofwalker]

Well, this man is very intelligent. I feel like he doesn’t understand how fractional reserve banking works. If you did, 0% makes total sense.

[@BS.-.-]

Early 2022 I was looking for a newer tractor to replace my 30yr old machine. I looked into alot of new machines and didnt care what color it was. There was only 1 brand (kioti) who was offering 0% financing. The thing is there machine price was higher if you took the 0% vs a 2-4% interest loan. So it was really never 0%...they just added the intrest to the machine price. Well I ended up buying a bigger machine that was 12yrs old with cash and truly 0% intrest.

[@robwhitman769]

Yep, bought a Bobcat ct1025, cash price was significantly less than the 0% interest price. If you don’t buy it outright, they’re going to make you pay for it, regardless of the interest rate.

[@dagarbear2311]

Very good points. Not everyone thinks it through.

[@LittleCabin]

Bought my JD 2038R at 0% interest...needed it it right away, needed to minimize my monthly payments, and wanted it paid off within 6 yrs before we retire. All worked out ( but 5 yrs to go)!

[@HomesteadBandwagon]

I'll bet your back has been greatful!

[@LittleCabin]

@@HomesteadBandwagon Main use so far has been road and trail maintenance, and occasional brush hogging, for which my riding mower has been grateful!

[@shgnofficial5357]

That is really helpful --Thankyouverymuch

[@user-dz5mq6gs1i]

Great glad I bought my tractor from you and your dealership. Good to know someone i can count on when i have a question

[@HomesteadBandwagon]

We're grateful for customers like you!

[@sekprepper6937]

Great video. It was very informative. It's always good to have "a friend in the business."

[@HomesteadBandwagon]

We're all in this together!

[@brianyoung5648]

Great job on the explanation

[@Campzzyzx]

This is Fantastic thank you. My mantra that I've adopted in sales and negotiating goes like this. "Your price, my terms or Your terms my price." If i can't make a deal like that I take my business to the next guy until I get someone willing.

[@HomesteadBandwagon]

Find the "win-win." It's better for everyone

[@jeromebecigneul2911]

Great video. wish I'd seen this last year.

[@afaqgul2165]

Thank you for the reply….

[@tmpopson1]

Great video!

[@warhammer10101]

Excellent video.

[@Hugo-Hernandez]

Great information. Thank you

[@HomesteadBandwagon]

Glad it was helpful!

[@christianb1176]

Great video. I had a good 0% deal on my Bobcat Ct2025 with several implements all financed at 0%. It made the most sense to me, especially when I considered inflation over 7 yrs. Putting my cash elsewhere now made more sense.

[@harvestvillage695]

Exactly. The dollars you will be paying in 7 years will be a lot smaller than now.

[@slogan9105]

nice work

[@jarretolsen2771]

Though Dave Ramsey would disagree, I think it’s a great option and advantage. Our fixer upper home is at 3% interest, and bought it 2 years ago when things were better in the economy though I made less. I feel like with such a cheap house payment, and zero vehicle debt it’s smart. Especially when you do side business to offset or even totally pay the payment. I think even in two years if I needed to sell I could make my money back or even more than the price at the time of purchase.

[@shgnofficial5357]

Quick Stupid question --that paddock you are in is beautiful, did you sow that or is it just well maintained Pasture land, please? Sorry --I'm a rookie

[@wht240sxka]

Thanks for making this video to explain in more detail. Don’t know if this deal is going on still since its July??

[@HomesteadBandwagon]

A lot of manufacturers are running 0% options currently. I think they won't disappear any time soon!

[@AdamGman3]

most people on here have heard of motovlogs. you would be the perfect person for some tractorvlogs. just you using the tractor while talking to your viewers about what ever.

[@kidsythe]

i bought a Kubota, 60in cutter, and loader last week. 0 down, 0%, 84 months with a catch. you could pay the dealerships loan cost thing so roughly 1100 upfront. but it saved interest cost over the years

[@HomesteadBandwagon]

Interest rates are a little brutal right now. I'm seeing plenty of folks taking advantage of the low rate financing

[@jazzdad52]

Makes sense. I’m about to buy for cash, haven’t asked about what price would be at 0% financing. If I could get actual 0% and invest the cash at 5%, it would make sense, but obviously, lots of people involved with the financing need a paycheck. Never going to really be 0%, unless times are tough for the manufacturer, and they need to sell off inventory at a loss, but then will they be around in 2 years? You DON’T always get what you pay for, but you NEVER get more than you pay for.

[@802louis]

It’s time for a new tractor what should I buy ???? Need 60 hp

[@christinariggs896]

IMO either pay Cash or if needed do the 0% financing. Do not do the higher rate for a chance at a very very small savings. Life happens & if 1yr into your 2yr pay off plan something comes up & you can only afford the minimum payment you will be paying WAY more for the loan & it will take you even longer to pay it off as well.

[@kodiak2005]

Very informative. I was taught, from my grandfather, back in the 70's. If you can't put at least, 50% down, or pay cash, you don't need it. Save a while longer, than go back shopping... Again, great job on the video.

[@harvestvillage695]

Good advice for your grandfather's time I'm sure. What was the inflation rate then? What was the interest rate? (I doubt 0%) What was the depreciation on tractors back then? Someone told me yesterday that they could make payments on their Kubota for 6 months, turn around and sell it and come out even.

[@bb8503]

I just bought a bad boy 4025 last week for 0% for 84 months with 0 down. Also was able to add in the sales tax here in Arkansas. Several other brands were close to that but this was the best I found. I wanted to put 10k down but I thought I would just save my cash to have in my pocket. Now I could have got cash incentive’s but taking the rate. Just like you said I would have saved money by taking the rate if I paid with in 2 to 3 years but I wasn’t really in a hurry to pay it off. And who knows the tractor can also be marked up a little to still get their kick back from the 0%. But yes this is great advice when you don’t have an idea on how to rates work. Thanks for the detailed info!

[@PoisonShot20]

And your opinion on the BB tractor is? I heard complains about quality on the metal frames. Looking to buy a 25hp tractor, w/ BM, FEL and BH.

[@bb8503]

@@PoisonShot20 I don’t have any complaints on quality. The only thing that you will see a lot talk about is the bigger frame with 25hp and the 3 speed. Low gear is great, middle is alright unless going up and hill. Then high speed is useless unless your on flat ground or going downhill. I knew that when I bought it but wanted the lift capacity more than high speed. I actually could have got away with the 30 series and been happy I believe.

[@PoisonShot20]

@@bb8503 thanks!

[@PoisonShot20]

@@bb8503 How many hours and what you most use it for? I'm in NY, BB dealers aren't close to me. But I had a 2003 BX1500, love it, bought it 9 years ago, paid $6,000, with 400 hrs, I just sold it for $6,400, 860hrs, never had to take it to the Kubota dealer, only parts that I changed it was hydraulic hoses, new ignition switch and rebuild the starter. But it's Kubota, Bad Boy may be just that!🤣🤣 Thanks!

[@bb8503]

@@PoisonShot20 so far I don’t have any complaints on quality but I don’t have enough seat time to tell someone a good review. The 4025 does lack some power on the 3 gears it’s got. Low is just fine middle works unless your going up a grade. High is really use less unless your on flat ground or going down hill. I mainly bought this size for lift capacity mainly and then a little bush hogging

[@afaqgul2165]

I love your videos…. What are your thoughts on Mahindra tractors…..I am torn between Mahindra, Kubota or Deere !!! Man it’s crazy the options we have. Also the parts availability after purchase is important.

[@HomesteadBandwagon]

Mahindra compact tractors are, to my understanding, made by either Mitsubishi or TYM. I wasn't impressed with the TYM platforms, but the Mitsubishi is a real workhorse. Mahindra recently bought a controlling share of Mitsubishi tractors, so they're going with that design going forward, which is great. Out where I'm at they lost a TON of dealers due to bad management at a corporate level, but that doesn't mean they don't sell decent machines.

[@drewhoverson314]

Great Video Micah. Something I’d love explained is just why equipment is so expensive? Supply and demand? Compared to modern vehicles, a tractor, mini ex, or skid steer is so simple. Lots of steel and hydraulics, yes, but simple machines nonetheless. I’ve got a 1025R with front loader, box blade, and bush hog. I’m into that setup about $17k. I’d love to get a mini ex and or a skid steer at some point but the prices are insane. $120k+ for a high flow skid steer and drum mulcher for example. Maybe it’s just you can make a good living with those machines so by nature they have to be expensive? 😂

[@HomesteadBandwagon]

I'll tell ya- it's absurdly expensive to design and build equipment for the US market. There are so many restrictions amd requirements and safetey features a machine must have. A lot of these things are good in theory, but emissions control systems alone are ridiculously expensive to design and build. Add to that the cost of hydraulic fittings and heavy steel, and things just add up. You COULD buy a cheap excavator from China on Alibaba, but there is a significant difference in quality and design

[@blessed7fold]

I can answer that. Equipment manufacturers price machines based on their use value to the end user. They know the demographic for skid loaders are commercial contractors that bill so much an hour for their jobs so they have the ability to pay it. The margins on those machines can be very good as you pointed out, that's why so many of them have jumped into it.

[@darkbikelife4270]

Any experience with the boat market? Haha

[@rebeccaaldrich3396]

​@@HomesteadBandwagonI would pay more before buying anything Chinese.

[@SICDavid]

People, you got to understand basic business. Products are built with a COGS ( cost of goods sold) and a cost of operations built into the product. These products, let’s call them tractors, sell with a tight margin built into them. For example, the tractor might cost $15k to build. They then add $5k to cover the profits they need on every tractor they sell. That $20k covers COGS, ops cost and a little extra for profit-that’s what share holders want to see. The dealer then is given instructions to sell the product for 25k and allows the dealer to make $5k per tractor sold. Dealers have the flexibility to sell the tractor for any price between 20,001 and 25,000, or more. That delta between dealer cost of 20k and retail(MSRP) is the dealers revenue. The dealer could discount the tractor by 1000 for a cash buyer or offer a finance deal. The dealer could present a 0% ( or any rate lower than market rates) finance, smoke and mirrors, and sell the monthly note to you because he knows you will buy on cash flow. Most Americans buy what they can’t afford and dealers know this. Key point…if you can’t pay cash, don’t buy. So now the dealer knows if the payment can be attainable and delicious to the buyer, the tractor will sell. So he says I have a 0% deal for you. He will simply take the list price of the equipment and divide it by 60 months and voila their is your monthly payment for the next 60 months and the dealer never discounted the price and you got 0% interest and announce to all your friends and family you got zero percent money knowing the going rate for money today(Aug. 2023 )is 8 % . Sorry, you got no deal. Their are no free lunches and when doing deals, you better know what you are doing. Dealers are showcasing their products in these fancy buildings with your 0% percent interest deals. Think about it. You will never get all the manufacturing discounts available to you with a zero % interest rate.

[@geraldbrakefield3874]

well the place i am going to buy has an extra 2k on the price of my tractor for the 0% loan which is cheaper than intrest for only 2 years of a 6.9 intrest. so im saving money this way and they still make money.

[@HomesteadBandwagon]

Sounds like a pretty great deal. With interest rates at their current levels, taking a price hike to get 0% seems like it's benefitting a lot of people who plan to pay off their tractor over a longer term.

[@XX-ue6kj]

Banks have expenses: Such as "whiteout", "bengal tigers" and "politicians"

[@HomesteadBandwagon]

Correct.

[@ericm6863]

Enjoyed the video. I currently have a credit card offer of 0% on purchases for 18 months (835 FICO). Is using a credit card an option with most tractor dealers? Is that considered a cash sale for discounts?

[@HomesteadBandwagon]

I'm happy to accept credit cards at my dealership, and it's certainly considered a "cash" deal as far as rebates/cash discounts go. Some dealers will charge a percentage for using your card, though, so definitely ask ahead of time

[@blessed7fold]

​​@HomesteadBandwagon You better rethink accepting credit cards to purchase high dollar equipment. Have you ever heard of charge backs?

[@HomesteadBandwagon]

@blessed7fold yep. The consumer must prove that they did not purchase the equipment or face very serious consequences. In person credit card purchses are safer for retailers than any other type of payment, when proper steps are taken to verify identity.

[@panamafred1]

That would be a very big tractor to flip an entire house. Quite the mental image!

[@brentjohnstone4471]

Oh my goodness, your killing me! Cut to the chase.

[@HomesteadBandwagon]

I'm paid by the hour $$$

[@user-wc8lu7qd2m]

The only way zero percent doesn’t make sense is -- never. If your house has a mortgage then you should take all the cash and put it on the house. If you have a car loan, you should pay it off with the cash If you have a student loan or any other debt you should put the cash on that. Then if have no debts; the money should just go to investment (of any kind) Pretty much every investment you can make will return more money that the required insurance Furthermore, with insurance, you are getting something for the money. You are protecting an asset. So there is zero and I mean zero reasons to pay cash when 0% interest is an option.

[@johnstjean1422]

You forget to mention a lot of this 0% financing. The interest for you to lend is added to the value of the current thing your buying tractor car snowmobile. So let say your manufacture is selling a tractor that worth 20,000 when they come to sell it. they had 6,000 to the value for interest they would get. So now there advertising. At 26,000 at 0 percent

[@HomesteadBandwagon]

Yessir. I start yapping about that 7 or so minutes in 😀

[@jiimpowers5078]

Coworker wife died, life insurance went on a Cadillac. 6 years later car is junk and money gone. My dad bought a car cash at 60 yrs old . Dad died of cancer, 4 years later step mom has a car she can't drive home she can't keep up and money gone. My case 0 % still have my money making retirement a lot more comfortable and will be paid off in March 2024. 3 months to go . 0 % for me was the way to go as my money in rrsp's was still growing. Think ahead in life , I retired at 57 , in 12 years I bought a used camper spent 10,000 on fuel 17000 total, left new Brunswick Canada , visited my daughters son (grandson 5 days old). Carried on to Seattle , Oregon, California to get on route 66. Up to Vegas , spent my gambling budget in one bet! All one dollar of it. Carried on to Memphis, and Bristol to see the Nascar track. Returned by turnpike home. gone for 43 days, bought new 1023e john Deere and rrsp's are at the same level as when I retired. Also bought a new chev sonic At 0 % paid for in 2022. and a rusted 4x4 Ford ranger , now dead and gone. Married 49 years.

[@BillyBlaze7]

for Yanmar to get the 0% you have to agree to buy $3,000. insurance policy that also has interest added

[@HomesteadBandwagon]

Most banks will require that their asset be insured when it's financed. Just like a house or a car. The good news is that if you're financing at 0% you're not paying interest on anything, including the insurance

[@BillyBlaze7]

@@HomesteadBandwagon the way it was explained to me was like what you said in your video with the tractor attachments I could get the 10 year 0% but the 3k for the insurance extortion would be financed with interest added on to it but not the tractor. They did offer a 7% interest rate at 7 years fixed without the insurance extortion requirement though.

[@kentmagruder390]

Without taking 20 minutes to get to the point, No a person shouldn’t buy with zero % interest unless you can’t afford to buy it cash out. The advertised price doesn’t apply if you get 0%. You pay a higher price for the tractor.

[@HomesteadBandwagon]

Glad you found it helpful!

[@johnkovac4436]

I got 4066r with loader self leveling and backhoe and grapple bucket for 81000 with 1600ins through John Deere for life of loan 6 yrs and 0percent loan well worthy it as wouldn't been able to afford loan with interest I'm now only got 20 payments left yahoo can't wait,save 17k in intrest

[@thomassmith5357]

How you like the LS tractor

[@HomesteadBandwagon]

Been loving it. We're at 450 hours and it constantly performs beyond expectations

[@garvysgarage]

What’s interesting to think about is as borrowing money has gotten cheaper, how the average wage has stayed basically flat, leading to a large gap between what people earn and what the buying power of a dollar is.

[@shgnofficial5357]

Bengal Tigers!

[@ronzaleski8699]

This reminds me of the dog chasing his tail.

[@HomesteadBandwagon]

Perfect analogy for consumer finance

[@backachershomestead]

Had have 0% financing on everything. Paid cash and no worries.

[@wishkah4369]

I want a tractor. Wife doesnt. I will win!

[@HomesteadBandwagon]

A tractor is much cheaper than surgery for a hernia. Case closed.

[@RickNethery]

Interest is theft. I always pay off early to avoid paying interest. Best deal i ever got was a zero percent interest on a Kubota zero turn mower.

[@davidmokrzyckiii725]

My goodness u made this long and drawn out about 15 minutes longer than it should be

[@HomesteadBandwagon]

Bummer 😪

[@mistersniffer6838]

Yea, I just have $34K in my pocket to throw down, chump change!!

[@HomesteadBandwagon]

Stop buying that dang avocado toast!

[@mistersniffer6838]

@@HomesteadBandwagon - But its soooo good!!! 😭

[@moedeclerk6688]

15% interest rate and higher was never normal. Stop lying. Even back in the 80's it was seen as sky high - but they had no option.

[@HomesteadBandwagon]

If you have no option, that's normal. In 1981, 30 year rates were around 18%. That was the "normal" rate.

[@angusblack9900]

Just get your wife a second job.

[@chriskimber7179]

Weird when some dude on youtube answers the exact question I was wondering! Now I can put all that money I saved into crypto 😝

[@Jemou-yd6pm]

Video is way longer than it needs to be. Yet, it fails to consider the income you can get on your existing cash by taking the free money. Please, get to the point next time and leave out the extraneous stuff.

[@HomesteadBandwagon]

Sorry, bud. I'll refund the $0 you were forced to pay to watch the video. Hope that helps. 😜