I went to Ag Dealer to look at some old tractor parts for my old Gilson/ LawnBoy tractor and while I was there I asked about a NewHolland Sub Compact tractor with a deck and a front bucket
so the guy writes it up and says if I give him $800 over the cash price, he’ll give me a loan for the cash price at 0% for 4 years……. I don’t know what the rate is, I didn’t ask, but it seems that I would be paying $800 for an interest free loan..
I would post a link but the NH site kinda sucks..
anyway here is the quote
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Replies
6% I think.
That is if you went to the bank to finance the cash price for 4yrs. if at the end of the loan $800 had been paid in interest the loan would have been a 0.059% loan. Not accounting for terms/conditions principle vs interest payments and all that kind of ####.
Personally I'd say the interest rate is 0% for a $14,300.00 tractor. If the unit is worth that price to you and you can't find anybody selling the same one for under 14300 after any purchase plan offered than it's a deal.
.059 or 5.9% (same thing in math circles) would have been the APR if you paid the loan back in 12 months.
that's what I thought, I told him I would pay for it, so he hands me the ticket with the extra 800 on it.
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I'd start by comparing the payments over 4 years, plus whatever you have to put down.
Pete
there weren't going to be any payments, but if I read that quote right I only need $800 downpretty cheap I guess
Edited 5/16/2009 2:41 pm by maddog3
It works out to 48 payments of $297.91 @ 2.84% APR
Assuming a $13,500 principle and $14,300 in total payments.
I didn't ask about a loan.
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Guess I'm missing something then.
The options I see are.
A. You write him a check for $13,500 and he loads the machine on your trailer.
B. You sign a 4 year 0% interest note for $14,300. His $800 bump in price turns his 0% loan into 2.54% loan on the original 13.5k
Your approach seems correct to me. 800 is approximately 5.9% of 13,500, but since it's over four years, the apr is not 5.9%.
and, whether he asked about a loan or not, unless he's paying cash on the barrelhead, he's getting a loan.
k
that's the way I read it too, just never had anyone write something like that must be some new math
kinda like paying more for using a credit card maybe he really needs to get rid of it and figured $800 was in my pocket
anyway there is another dealer in Michigan, I might see what he comes up with.
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