Motorcycle financing question

[uscgbeachbum]

New guy here. I've been doing some reading here for a few days and I've found some great information. Since visiting my dad in NC over Thanksgiving my wife has suddenly started asking about us getting a motorcycle after hearing about my dad and stepmom's weekend excursions on their ST1300. Of course this was a total shocker since she has always thought motorcycles are for people that just want to kill themselves. Personally, I used to ride motocross when I was younger (KX250 when I was about 12-15), but haven't ridden a motorcycle in about 9 years. I was thinking about a Ninja 650 or Katana 600. I went to the dealership around town and they wanted almost $500 over MSRP for all motorcycles (kind of surprising). I talked to the manager about financing and he said that right now Suzuki and Yamaha have the best deals. He said he could finance me for 0 down and $89 a month for 5 years on a Katana 600. For a little math...$89 x 12 months x 5 years = $5340. But the price of the Katana 600 is $6700. Am I missing something? So I went to the Suzuki website and found this language under their financing deals.

"12.95% APR and low monthly payments plus any late fees effective for 60 months. For purchases up to $8,500, your monthly payments will be $99. For purchases between $8,500.01 and $15,000, your monthly payments will be $169.Paying only this amount will not pay off the purchase during this period. Thereafter, the regular Minimum Monthly Payment and either the Standard Rate 17.9% APR or Default Rate 21.9% APR apply."

So now I'm really confused. If I go with the deal the manager offered me ($89 a month) I won't actually own the bike after 5 years? Any help is greatly appreciated.

[Dash Riproc]

I believe that $89/month is the MINIMUM payment you have to pony up each month. After 5 years, if there is still a balance, the intrest rate will go up and you will continue to pay, at the higher rate, until the balance is paid off and you own the bike out right.
If you pay more than the $89 minumum you will pay the bike off faster, of course.
This program is nothing more than a credit card, it's not a loan.
You can add all kinds of equipment and gear, if you wish...and the dealership would love for you to do that.

[uscgbeachbum]

AHHHHH! That makes sense. Are dealerships willing to negotiate? Unfortunately, the dealership near me sells about 20 bikes per day so its not like they are hurting for a sell.

[Dash Riproc]

Around here I can negotiate better at the parts counter, than on the sale of a bike...of course, I bought my bike from a private seller through Craigs List.
I replaced all four turn signals on my Nighthawk after I bought it. The dealership wanted $43 per signal...I went on ebay and found them for $23 each. Went back to the dealership and told them I can buy turn signals all day long for $23; the dealership matched the price (to my surprise).
Give Craigs List or Cycle Trader a look before you pull the trigger at the dealership. Sounds like your dealer does a decent volume so I'm not sure of your negotiating chances...sometimes they will surprise you, though.
Of course, pulling a scoot right off the showroom floor does bring a measure of confidence in many ways.

Also, if you bring your own money in hand to the dealership, that will help your chances of securing a better deal, too.

[uscgbeachbum]

Thanks for the info. I thought the manager was basically telling me that if you finance you get a better "price". Those interest rates are absurd. I think I'll get one of those "convenience checks" from one of my credit card companies and then do a 0% balance transfer to another credit card company.

[MicheleZ]

Be careful about putting it on a credit card - you are looking at compounded interest!! Not a smart move. It would be best to get a lower interest rate loan from a bank and make sure it is SIMPLE interest. Our bike and ATV loans are simple interest and we financed them through the dealerships. If you don't know what compounded and simple interest is then you better start researching it on the internet or call your local bank - if you don't know what it is, you shouldn't even consider getting a loan because you are going to get screwed.

[flynrider]

This post is an excellent example of how "credit card" loans differ from real vehicle loans.

I wonder how many people don't bother to question the numbers and walk out thinking they'll own the bike in 5 yrs. for $89/mo. I'll bet it's more than a few.

[CNF2002]

Thanks for the info. I thought the manager was basically telling me that if you finance you get a better "price". Those interest rates are absurd. I think I'll get one of those "convenience checks" from one of my credit card companies and then do a 0% balance transfer to another credit card company.

Thats interesting. One always had better deals presented to them when they walked in with cash. I wouldn't be surprised that the reverse is true these days, with dealers instead more interested in slick financing than the total purchase price and other fees.

I think I'll get one of those "convenience checks" from one of my credit card companies and then do a 0% balance transfer to another credit card company.

There's nothing convenient about those checks. Save up the money. It will take you 2 years to save up for an 8,500 bike with $350 a month. Meanwhile you can get some training, do research, etc. Or if you just can't wait, at least go through a traditional loan.

I can't imagine anyone putting a $8,500 purchase on a credit card. You might want to look into credit counseling.

[snwflk303]

My routine for bikes and cars.
Go to your bank and get pre-approved for a loan amount exceeding the total out the door price range you are looking at. Now when you are shopping around, you can talk with a litttle power as a CASH customer and only discuss out the door pricing. If you have a trade, make sure they see it and give you a value. Next go to all the dealers you can of the bikes you're considering and do the same thing, ask the same questions, and talk out the door pricing (including trade if any). Take the best price you can get and ask for an additional "reasonable" amount off or if they had a blue bike at dealer number 1 at a super price and you want to buy from 2, just tell em like it is and don't tell them it was a one chance special. Don't stand around and haggle. Give them your phone number and make sure you can come in that day to sign the paper work. The best time to buy is usually around the end of a month.

Dealers get a cut off your financing through the dealership from thier lender. Those promo rates are usually limited term teasers, say for example $99 a month for the first 6 months up to $8000. Your interest builds during that time so you aren't getting any deal.

Whew, that's my 2 cents

[storysunfolding]

I can't imagine anyone putting a $8,500 purchase on a credit card. You might want to look into credit counseling.

You don't have a few big imagination do you? Or maybe you just like being negative.

Yeah the suzuki credit card plan blows goats. That's a gaurantee.

At the same time, depending on your circumstances an 8500 expense on a credit card can be a good idea if you have any baseline intelligence. For instance, my high school history teacher built his own house. It cost him 100k in materials (nice house). He had the opportunity to get a no limit credit card with 0% interest on any purchases from the first three months. So he put the whole thing on the card. The caveat was that it was a Fifo card or the money you put on it first is the money you have to pay off first. So were it in an interest accumulating period and you put a charge on the card, you would pay interest on that amount until you paid the 100k off . He obviously put the card away, paid the $50 yearly fee and got a 100k loan mostly for free.

If you are intelligent, and look at all the fine details you can get great deals from credit cards. i put everything on my CC b/c it gives me 3% back on everything I spend in a year. I'm currently running a balance with 0% interest, I have enough money to pay it off now but I'm only paying $500 a month as that fits my budget best. And the cool part is that on Jan 1st I get 3% of $50K+.. of course a majority of that came from my hospital stay and following medical treatment. I normall wouldn't put that on my card and wait for insurance to pay if I didn't have 0% interest and ironclad promises from 2 insurance companies.

Yeah so rant done.. financing a bike can be done in a whole myraid of ways. The key thing is to get all the details that you can and compare them, make a budget, look at what you can afford, leave a gap for insurance,maintenance,gear, and then some for emergency spending (crash repairs maybe)