Buying a new utility tractor for your farming operation can be a costly endeavor. Utility tractors are expensive pieces of equipment, and often, your working capital is the only source to finance your new tractor purchase.
1. Know Your Monthly Tractor Operating Cost
Set a monthly budget for operating your new utility tractor and stick to it. If you have not already taken the time to calculate your monthly operating cost for your existing utility tractors, take some time and do it now. Then compare this figure to what you would expect from the new utility tractor you are thinking of buying. Set a goal of reducing your overall utility tractor operating cost by 10%.
2. Choose a Suitable Payback Period for Financing Options
Take a close look at the different financing options available to you. Compare the advertised monthly payment for each financing option you consider with your monthly operating cost figure. Pay close attention to the difference between financing options with a shorter and more extended payback period. Which payback period is best for you? There is no one size fits all answer here, but one thing is sure, if your bank tells you they can save you money with their financing plan, they are probably right – they get paid more when their project has a more extended payback period.
3. Consider Buying Used Equipment
Perhaps you have been tempted to buy a pre-owned utility tractor from a local farmer. Many people are afraid to buy used equipment because they do not understand the risks and may think they are too great, but this is not always the case. Used equipment can be just as safe and reliable as a new one and, in some cases, may represent a better value proposition for you compared to buying new. The most significant advantage of buying used is the lower price, and this can be a massive saving for you, especially if you are financing your new tractor purchase.
4. Save Money on Transportation Costs
Buying your new utility tractor at the dealership may not be the most economical way to go. Check around locally to see what local farmers are selling their old tractors, then compare that figure to what the dealer is offering for their new machines on sale as a package deal with financing. You can save hundreds of dollars in transportation costs if you buy your new tractor from a local farmer.
5. Avoid Hidden Costs
You cannot always anticipate how much cleaning and maintenance will cost before you take delivery of your new utility tractor, so check with the dealer to find out all the fees that will apply to your purchase at the time of delivery. You will have some additional expenses once you have purchased your new machine, and those expenses may or may not be fully covered by the manufacturer’s warranty.
Buying a new utility tractor can be a daunting task, and it is easy to get overwhelmed by all the many considerations you will have to make. The key is to start on the right foot, do your homework, and lay out a plan ahead of time. Consider asking for help from experts familiar with this kind of purchase. It will save you valuable time and ensure that you get your money’s worth by avoiding the common mistakes and pitfalls when buying a new utility tractor.