This may be a little OT but credit is still involved. I have been shopping for a KUBOTA Compact Tractor. WHICH ONE IS THE BEST DEAL Dealer 1 offered me one for $13500. Dealer 2 offered it to me for $15200 with zero percent financing. Would I be ahead to pay dealer 1 $13500 cash or should I go with dealer 2 and finance $15200 with the zero percent financing?
Are you looking to add a positive tradeline to your report? Is that the reason you wouldn't just automatiaclly pay cash? Is the second dealer going to report the TL? My opinion would be to "finance" the first one at 0% (making the dealer match his competitor's terms), reserve 12 months payments in cash, put the balance aside in an interest bearing vehicle for 12 months, then pay it off after the 12th month. what do you think?
Are you looking to add a positive tradeline to your report? Is that the reason you wouldn't just automatiaclly pay cash? Is the second dealer going to report the TL? My opinion would be to "finance" the first one at 0% (making the dealer match his competitor's terms), reserve 12 months payments in cash, put the balance aside in an interest bearing vehicle for 12 months, then pay it off after the 12th month. what do you think?
Depends on the following variables: 1. How long is the 0% financing for? The longer the better. Dealer 2 is factoring $1700 in interest into the deal. At 12 months taht's roughly 13%, at 2 years it's apprximately 6.5% and at three years it's almost 5% 2. How much interest can you get for that money? If the APR the bank pays you is lower than the APR you are paying, pay cash.
1*Are you looking to add a positive tradeline to your report? 2* 2*Is that the reason you wouldn't just automatiaclly pay cash? 3*Is the second dealer going to report the TL? 4*-My opinion would be to "finance" the first one at 0% (making the dealer match his competitor's terms), 5* put the balance aside in an interest bearing vehicle for 12 months, 6*then pay it off after the 12th month. what do you think? Poochie =============== 1* No 2* No _ I just want to take the Tractor deal that cost me the lest money. 3*Don't matter to me one way or the other. 4*The O % isn't available on the first one. 5*I all ready have the entire amount for either deal in an interest bearing vehicle. 6*If I do that I loose 2 years interest on the funds.
Re: Re: WHICH ONE IS THE BEST DEAL ? But the question still is which one will cost me the least money?
Re: Re: WHICH ONE IS THE BEST DEAL ? Well, ok, lets say you have the cash available to purchase either outright. If you purchased option 1 in cash, and invested the difference, in 4 years (as an example) you'd have $2338 assuming an average of 8% apr in a VERY conservative fund. If you financed option 2 over a 4 year period and invested the purchase price in the same conservative fund, you'd have $20,910 less the payment amounts which results in a net gain of $5,710. (assuming you can afford to invest the whole purchase price and make the monthly payments from another source.) Now, that's a simplistic example that doesn't consider depreciation, inflation, etc. But IMHO I'd consider the finance deal. HOWEVER, I was an english major, so what do I know Poochie
Re: Re: WHICH ONE IS THE BEST DEAL ? I think that's what Flyingifr was getting at--you have to determine how long the loan is, and what else can you do with your money. You just lay out the opportunities. If you have the cash, then financing means you have the $13K to invest now. If you didn't have the $13K, you would have to factor in that you'd be investing the money over time. In short, if you can invest the money and make more than $2000 in the time you'd finance it for, take the financing. If you'd make less on your money, pay cash.
Re: Re: Re: WHICH ONE IS THE BEST DEAL ? The 0% financing will cost you the least amount of money since less will be coming out of your pocket. Technically if you invested the money and earned interest, you would be ahead... yada yada yada... If you have the cash pay for it. Nothing is like the feeling that looking in your backyard seeing what you have "conquered" (ie, the purchase of the tractor) Buy John Deer.... Kubota's suck. (look into part replacement costs and you will see that it is better to run with the Deer)
Re: Re: Re: WHICH ONE IS THE BEST D The opportunity cost you lose by paying the 13K in a lump sum is too high. There is no reason why you can get a return of 7% - 12% per annum with smart investing. Go for the financing and pocket the spread you make from making the 13K work for you.
