What’s the catch with 84 months 0% APR?

[Bigdawg90]

I’ve been shopping for a used tractor for about 4 months. I’ve been to look at several. I was trying to get into one under $5k. Those needed more work than it was worth or didn’t have a loader. So I upped my budget to around $10k. I went to see several that were used and abused and walked away from negotiations. I’d hit ‘em back up and they said it sold for asking. So I started looking at new.

I’ve gone to Kubota, John Deere, Mahindra and Bad Boy dealers.

My favorite, by far, was the Kubota 3302 or 3902 HST.

Am I missing something with the 84 months 0% APR. I’m pretty sold on the deal. I’d buy insurance and attachments cash and finance only the tractor and loader. He said they offer a $500 cash price discount? That seems ludicrous to me. $500 to finance a $25k loan for 7 years 0%.

With inflation a 0% interest loan seems too good to be true. I put the deal on ice because it just seemed like there was a catch. With CDs making 5.25% I could put cash into a CD and literally make money over 7 years then pay it out right right now.

My wife and I have been cash people for the past couple years due to interest rates. I already have neighbors who heard I was going to buy a tractor. I’ve already got side jobs lined up.

This is either a blessing or there’s a big catch and I’m missing it. What is it? Am I missing something?

Does anyone know of any negatives for this other than debt. The finance charge total is $900. Thats the only charge on the itemized list. I checked the final financed amount and there weren’t any hidden charges or pre payment penalties. This wouldn’t be my first piece of machinery but it would be my first tractor.

 

[OK Corgi Rancher]

The "catch" is you generally pay a little more for the tractor with equipment. You might not get as good a price as you might by paying cash. Aside from that, at least from John Deere, there is no catch, really.

I'm on my second 0% interest tractor. I got what I thought was a pretty fair deal and chose to use their money instead of mine. The downside is the payment every month. I don't like it. I paid the first one off after only about a year. Can't do that just yet with the one I have now because we're doing some other improvements to the property and need our cash.

Another "catch" might be that Deere makes you buy insurance on the tractor. But it was something like $820 for the entire term of the loan and they refund a pro-rated amount if you pay the loan off. When I went to buy the second they didn't even do a credit check. They looked at the first loan and came back and said I was approved for $100,000 loan! They might think I'm good for that much but I know better!

 

[OK Corgi Rancher]

I meant to say... In my opinion, if you can swing the payment or the cost, new is the way to go right now. Used tractors are bringing an incredible premium right now and, frankly, most are not worth what sellers are asking.

Not to say there aren't some good deals on used tractors out there but they're few and far between.

 

[1shott]

0% is always the way to go.

Cars, tractors whatever a 0% loan, use someone elses money for how ever long.

You can always pay it off early if you want.

 

[OHJEEZE]

I got 20% off sticker price and 0.0% for 3 years on a 45 pto hp Deere ordered exactly how I wanted it (no hydrostat garbage!

The catch was 10% down payment!
And a few hundred for their insurance!

 

[TANSTAAFL]

You are paying extra to get the loan, so in essence $900 is your interest on a $25,000 loan over 84 months. Assuming you are paying a low price on the tractor to begin with (fair) and you could get the same deal without the loan I'd go for it. $25,000. With todays interest rates or the ability to invest that money it's a great deal. Only downside is your ability to get credit elsewhere, since it will go against your monthly debt service on your credit report. I do feel that the goal of banks is to enslave us with monthly payments. They win if something happens over those 84 months and you cannot pay the $260 or so payment, they get the tractor. The banks know the numbers, how much the tractor will be worth each year over those years. You just need to be careful not to incur more debt. That's my take, I'm not in the same financial position as you, my experiences in life have been different than yours more than likely. #1 most repoed vehicles are Dodge!

 

[Steelers Fan]

They looked at the first loan and came back and said I was approved for $100,000 loan! They might think I'm good for that much but I know better!

Self regulated men stay out of Suckerville. There is probably some sort of tractor/farm clause in the loan agreement. When you can't make payments or fall behind, tractor is devalued beyond remainder of note. So they take or throw a lean on the farm and start compounding interest. Seems fair to them since the tractor was used for production or improvements. It's like taking a spring tooth right up the keister. It can be quite harrowing. ( Sorry I couldn't resist farm inPUNments }

 

[wolfman1]

They do that on a lot of stuff, why exactly, I dont know. My last heat pump got financed for 6 years at 0%, no discount for cash. During the hieght of the car shortage I lucked out and got a new Corolla Hybrid for 72 months @2.9%. I could pay it off but am making 5% in my investment account. Use their money.

 

[OK Corgi Rancher]

Self regulated men stay out of Suckerville. There is probably some sort of tractor/farm clause in the loan agreement. When you can't make payments or fall behind, tractor is devalued beyond remainder of note. So they take or throw a lean on the farm and start compounding interest. Seems fair to them since the tractor was used for production or improvements. It's like taking a spring tooth right up the keister. It can be quite harrowing. ( Sorry I couldn't resist farm inPUNments }

LOL... No, there's no such clause in the JD contract. The only collateral is for the equipment financed. They've done this for years...probably decades.

 

[GlockPride]

Some of those revert to a really high interest rate if you’re late/miss a payment. Check on that angle. Some of them even revert that interest back to dollar one.