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I feel for you in this situation Ian.

I had a similar dilemma where I had great credit but then I got laid off and things went downhill. I've spent the last year trying to repair my credit and things are just finally starting to straighten out. I believe I'm in the 660 or 670 range now.

Unfortunately for a geek/luxist like me credit is a necessity. If I want a nice car I have to get a loan. Could I save up $40,000 and just buy it out right? Probably, but it'd take me years and years and in between then I'd probably use the money for something much more practical

If people can live without credit it's probably for the best. Just keep 1 card incase of an emergency and be well.

However for a man like me there is no hope

I do however pay off my bills in full each month. I do not encourage anyone to accumulate large amounts of debt because it took me many MANY years to fight back a simple debt.

Blah blah blah I'm talking about myself too much.

At any rate I'll be paying for my bike in cash or with a check. At worst with one of the 3% checks my American Express card gives me.

I thought about financing a bike and well just sitting down and doing numbers just makes it seem so stupid. A motorcycle is probably the easier thing to buy in cash as most times it not a ton of money like a car purchase. I personally have chose to put my money into a ING Direct acct that has a high annual yield so i can just throw a chunk of my paycheck in there and just forget about it while it gets interest monthly.

Also i believe bank debit cards build credit, SLOWLY but i believe you can get some using it.

Bost wrote: I personally have chose to put my money into a ING Direct acct that has a high annual yield so i can just throw a chunk of my paycheck in there and just forget about it while it gets interest monthly.

smart

I wouldn't finance it through a credit card unless you were doing some sort of special deal with it and you know you'll pay it off before the expiration date. E.g. I have a check that is good through to 2010 right now with 1.99% apr from one of my credit card companies. I get them all the time but never use them.

That being said - getting a vehicle loan from a bank to buy your bike is an excellent way to build credit. You're going to get shafted on the APR% your first time around, and you may or may not need a co-signer depending on how much you make and the risk you're assessed at by the bank. Since you're doing this to build credit, if you have the cash on hand to buy the bike outright - I'd probably pay for 1/2 of it up front and put the other 1/2 in an account to have it auto-deducted. That way your payments are low, the amount you're actually paying out in financing is low, and you know you're all set for the life of the loan.

For any vehicle you decide to finance, it's a good idea to buy gap insurance. Gap insurance pretty much negates the negatives to buying a vehicle by loan, with the exception of the interest you pay each month. IMO, the interest payments really aren't a big deal. To some people they are. What gap insurance does for you is this:

If you wreck the bike/it gets stolen/whatever, it pays for the difference between the cost of the bike and the insurance payout. It is common with financing vehicles to get "upside down" in your loan. This means you owe more than the bike is worth. The gap insurance steps in there and pays the difference. It

As for living life without credit in the US: Good luck. Many, many, many aspects of businesses are tied up in this - these days even including jobs. When you have no score it's almost worse than having a bad score.

As was said above, credit is not the issue, it's debt that is. Credit is an excellent tool that all adults should learn how to wield.

Bost wrote:Also i believe bank debit cards build credit, SLOWLY but i believe you can get some using it.

I don't believe this is true, as your credit score is a record of your payments on an outstanding balance. Just having a credit card sitting there does nothing for you - they want to see that you have balances and can make regular payments. Thats what helps assess risk.

ANDS! wrote:

You can live life without credit.

Of course you can. You can also live your life w/o a car, friends, a degree, etc. - however the person who has any of these over the person who doesn't, probably has an easier time navigating the Sea Of Life. The reason credit IS good, is because some people CAN'T save up all that cash, and its simply easier to pay 300 dollars a month (which would be like an 8000-9000 dollar purchase) for a "sweet ride".

Obviously if you can buy outright, dont finance. But even if you can buy outright, and dont have much credit - dump a ton of money on it, so that you're looking at 10-dollar payments a month (it wouldnt be that, but you know what I mean) to establish credit. You're not gonna get that great of a rate, and you'll probably need a co-signer, but it is a great way to go about putting some credit on the books because it just makes purchases in future that much easier.

Hah, I bought my car outright, I have plenty of friends, I have a scholarship, I'm only 21.

The problem with credit cards is that they have ingrained this "You must have good credit" BS into our skulls. You can have no credit and get a home loan. You just have to find a mortgage place that does their own underwriting. The moment your guy tries to pass you off to someone else you walk out of the place and go somewhere else.

Sure, you can pay off your credit card every month and stay debt free, but not everyone can do that. Something could come up, you could have spent more than you expected and only made a minimum payment that month and then the next month as well because of the first month, and so forth.

Credit cards make it VEEEEERY easy to snowball into debt. And it's hard to snowball your way back out of debt, I have a method for doing so, PM me for more information.

ANDS, you don't need to own that "sweet ride" right now. You can get a "duct-tape" ride, save up, sell the duct-tape ride, move up to the "rusty-bolts" ride, save up, sell that, etc. In about 2 years you'll have something nice.

I spent $1000 on my bike, I'll ride it into the ground, all the while saving up to purchase my next bike, possibly a Bandit 1250, I'll pay cash for it, walk out the door saving the $1500 I would have payed in interest and pay for my insurance, which doesn't have to be full coverage because I don't have a bank telling me I have to.

If credit cards worked out so you got "free use" of their money, how the hell do they stay in business?

DieMonkeys wrote:

ANDS! wrote: The problem with credit cards is that they have ingrained this "You must have good credit" BS into our skulls. You can have no credit and get a home loan. You just have to find a mortgage place that does their own underwriting. The moment your guy tries to pass you off to someone else you walk out of the place and go somewhere else.

Doesn't work like that anymore. Read the papers dude - the whole mortgage industry is in it's biggest crisis ever. Your loan WILL get passed on to some other entity - not a damn thing you can do about it. And yes, you may be able to get home loan without a credit history (and even that is very problematic now with complete collapse of the subprimes), but your interest rate will be horrendous.

Sure, you can drop off the grid, avoid the capitalist system altogether. I wish I had the cajones to do it myself. But if you're in it, having a good credit rating will be important to you at some point, probably sooner rather than later.

Some debt makes financial sense. But NOT around a vehicle loan, as so many people above have eloquently pointed out.

For now, buy the bike you can afford to pay for. Get decent insurance. Get the best jacket, heltmet, gloves, etc. you can afford. Ride safe. Post entertaining stories on the forum for us older guys who ride with their wives.

You will have a really hard time getting an apartment in most major cities as well, without credit..much less a mortgage.

I can buy my vehicles outright, but I'd rather pay for them monthly at a low APR and payment, and keep building my savings at the rate that I am. Vehicles aren't bad debt, nor are they good debt - other than they're great at building your credit rating and you can't exactly keep buying more with the loan. Secured debt is rarely as much of an issue as unsecured debt (like a credit card).

DieMonkeys wrote: If credit cards worked out so you got "free use" of their money, how the hell do they stay in business?

Because those of us who have been building good credit for years get offers for 0% aprs, while some know it all college kids with no credit find themselves in a bind, needing to borrow some cash have to pay their 21.9% apr.

Plus, don't forget the credit card companies are getting paid by the vendors. When you go to Walmart and charge $20 on a visa card Walmart has to pay something like 3% of the transaction to Visa.

Listen to the hotdog guy, he knows what he's talking about.

I assume an actual bank loan would give me a much better interest rate, but I would almost definitely need a co-signer. But I have too much pride to ask my parents to co-sign a loan on a "luxury" item like a bike. Thats why I was thinking about the manufacturer credit card option, because I figured I might have a shot of getting one on my own without a co-signer.

Let me explain an example I have in mind...

Ninja 250 -- $2999

$2000 down (if they actually let you put down that much)

at 20% interest (just a random guess, im not sure what kind of interest rate to actually expect)

for 24 months =

$50.84 a month. Which of course is easily doable.

If im doing the math correctly thats $220 in interest that id be paying over the 24 months. Not that bad of a hit, and id be putting myself on the credit map in the process.

Am I right?

Don't know if this helps, but when I graduated from high school I got a credit card from Best Buy and used it to buy a big screen TV with one of their "0% interest for 18 months" deals. I've since bought a car and other random things from Best Buy (whenever they have good "No Interest" deals), and built my credit that way. I got my car for a rate of 6.25% from a local credit union and last I checked I had a credit score of well over 750.

I would not suggest even thinking about financing a bike through one of the manufacturers credit cards for the same reasons everyone else has said. Especially if it can be avoided and it's just a toy. I personally feel that you should only pay interest on needed things like cars and homes; everything else you should save up for.