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What % of purchase price is your loan?

  • Between 100% - 80%

    Votes: 14 14.4%
  • Between 80% - 60%

    Votes: 25 25.8%
  • Between 60% - 40%

    Votes: 22 22.7%
  • Between 40% - 20%

    Votes: 5 5.2%
  • Bewteen 20% - 0%

    Votes: 1 1.0%
  • Paid Cash

    Votes: 30 30.9%

  • Total voters
    97
1 - 20 of 36 Posts

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Discussion Starter #1 (Edited)
As new combines & headers (headers & fronts for Ozzies) have become very expensive to purchase, many growers are really seriously looking at their options.
"How the F... can I afford a new one of those" ..... is often the first comment growers cough out upon casting their shocked eyes over the dealership's quote!
Be that as it is, I'm interested in what percentage of loan - interest & principle repayments - would the average grower & contractor be considered as reasonable.
Obviously it depends on the $ amount purchase price & all these new Class 8 machines with 40' header, trailer, RTK etc. etc. are around or well over $720,000 ..... give or take a few shekels!

So the question is really: What % of the purchase price would you, or do you borrow now?

Between 80% - 100%
Between 60% - 80%
Between 40% - 60%
Between 20% - 40%
Between 0% - 20%
Paid Cash.
 

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Discussion Starter #5
Oh yes, no matter what colour, they can all have their time on the bench as well as their equity (trade value) drops faster than a brides nighty!
 

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Discussion Starter #7
Seems to be around $200 to $230 a sep hour for class 7 header and front talking to people. Is what it is.
Are you talking C/O cost? If that's what you can achieve for a C/O for a class 7 machine ....... you're doing extremely well!
I'm really asking about the percentage of capital purchase i.e. the loan you're required to pay off. I've been asked to do a presentation in regards to the total ownership & operational costs of machinery, in the near future & am trying to gauge the level of finance of machines by many more people than just me.
 

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Are you talking C/O cost? If that's what you can achieve for a C/O for a class 7 machine ....... you're doing extremely well!
I'm really asking about the percentage of capital purchase i.e. the loan you're required to pay off. I've been asked to do a presentation in regards to the total ownership & operational costs of machinery, in the near future & am trying to gauge the level of finance of machines by many more people than just me.
Not me just what different people I have talked to are talking for trade change over, cost per unit used to change over sorts out the sales BS I find. As for size of loan no idea.

Reading between the lines the change over seems to be about 10% per year owned as for % financed not sure as I'm sure most weight up there financing options and how much the plant carrys in its own right and how much the hole business carrys in its hole financing.

No simple answer.
 

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Interesting..

1. In 1999-2003 i was changing like for like over (STS) for around $100 an hour...alot less for no front included just seperator...and we were making money on the deals...what was the average price of commodities in that time period?
2. It depends on tax but i went as close to 100% as i could....HP...if guys are leasing its a hard one but if HP i would say alot are around 50% swapping at around 4 years or 1000 hours...the new ones always get dearer for not much more capacity so it throws it a bit IMO...back in the day the 9600 had the same capacity for pretty much all its life when it was in production...now they tweaking them alot more each year...
3. I always say if your not thinking "i cant afford not to have new" then you should really look around...sometimes its plain obvious...for me buying a ute is easy as its a must for my situation....theres not much gear i need to be new as size doesnt warrant it but some stuff has to be smick...header is the main one...when a dryer is in the mix then eases that need.

Good thread...

Ant...
 

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Ooohhh Deere
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Will never buy new.
Will always finance 100% of purchase price, as living off cashflow, no Overdraft, I can't be throwing money in on the deal.
Happy with current interest rates on my borrowings.

Feel free to use my situation in your presentation if you wish.
 

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Most times on equipment we pay the minimum down payment and finance the rest. Lately through dealers/CNH we've been able to take advantage of interest free for about the first 2-3 years. After that the loan usually ends up moved to a local bank with a cheaper interest rate than CNH offers.
 

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We've been using the strategy of trying to match our loan payments to what we believe the depreciation is. That way my cash flow matches my equipment depreciation and doesn't give me illusions of having more money than what the reality is. A lot people love to say they pay cash but a lot of people dont have that luxury and it doesn't make one farmer better than another. When you pay cash you're still paying interest regardless of whether its in the form of cash or lost cash time value.
 

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We've been using the strategy of trying to match our loan payments to what we believe the depreciation is. That way my cash flow matches my equipment depreciation and doesn't give me illusions of having more money than what the reality is. A lot people love to say they pay cash but a lot of people dont have that luxury and it doesn't make one farmer better than another. When myou pay cash you're still paying interest regardless of whether its in the form of cash or lost cash time value.[/QUOT


I agree with you to a certain extent. But money isn't worth much, and not paying interest may be better than an invest you could make with that cash. Can look at it either way.
 

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We've been using the strategy of trying to match our loan payments to what we believe the depreciation is. That way my cash flow matches my equipment depreciation and doesn't give me illusions of having more money than what the reality is. A lot people love to say they pay cash but a lot of people dont have that luxury and it doesn't make one farmer better than another. When myou pay cash you're still paying interest regardless of whether its in the form of cash or lost cash time value.[/QUOT


I agree with you to a certain extent. But money isn't worth much, and not paying interest may be better than an invest you could make with that cash. Can look at it either way.
Agreed, I'm just saying that cash costs money regardless of whether you're borrowing it, spending it or if it's sitting idle in a bank account. Locking in borrowing rates at current cost of money seems prudent to me.
 

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Discussion Starter #16
I haven't looked in years but ain't a guy better off leasing a new machine vs sinking so much debt into one?
From my understanding, the option of leasing (a novated lease) from the OEM or the market, is not common in OZ as the criteria is somewhat inflexible. I would suggest most do a straight lease or chattel mortgage. It doesn't really matter which way, or what people do to finance large hunks of depreciating steel, the costs are about the same. Whether you own it (chattel mortgage) or you rent it (lease), the cost is about the same. Tax implications excluded.
If your repayment or lease is $100k/yr & you harvest 4k acres, finance cost alone is $25/ac/yr.
 

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From my understanding, the option of leasing (a novated lease) from the OEM or the market, is not common in OZ as the criteria is somewhat inflexible. I would suggest most do a straight lease or chattel mortgage. It doesn't really matter which way, or what people do to finance large hunks of depreciating steel, the costs are about the same. Whether you own it (chattel mortgage) or you rent it (lease), the cost is about the same. Tax implications excluded.
If your repayment or lease is $100k/yr & you harvest 4k acres, finance cost alone is $25/ac/yr.
Would this be batter expressed as a average tons harvested or maybe average $ of grain harvest.

For me $100k yr is total machinery payment across all plant for 10k acres
 

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Discussion Starter #18
Would this be batter expressed as a average tons harvested or maybe average $ of grain harvest.

For me $100k yr is total machinery payment across all plant for 10k acres
Yes, I would agree. Growers get paid by weight & not area ..... so $100k/yr over 4k acres (1618ha) at average yield 1t/ac (2.5t/ha) = $24.71/tonne.
And, you may or may not be surprised that many people are paying well in excess of $75k/yr for a modern combine ...... many more are $100k or more! "The cost is the cost" they say. Which is an interesting statement in my opinion.
 

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Would this be batter expressed as a average tons harvested or maybe average $ of grain harvest.

For me $100k yr is total machinery payment across all plant for 10k acres
The problem with this is the tons harvested each year won't be the same, whereas acres stay fairly constant. Works better for a fixed payment in a budget using acres as opposed to tons harvested. Just my thinking.
 

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Discussion Starter #20
......... Works better for a fixed payment in a budget using acres as opposed to tons harvested. Just my thinking.
Yes, I can understand the budgeting logic in this statement however, maybe after harvest is completed, the number should be converted to a $/weight factor as that is what growers get paid by - weight! Some years will be higher cost/tonne & other years it will be a lower cost/tonne. Much the same way a people quote their fuel usage on a combine. It makes not the slightest difference to the profit (or loss) level when quoting lt/hr or lt/ha. Litres per tonne is the real important number ......... and it can/will vary greatly depending upon yield & or crop/field conditions .... to name two factors.
 
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