koji52 wrote:I'm sure any deal you may have gotten on the purchase price at kawasaki was outweighed by interest expense, finance charge, etc. Somehow, the dealer made money on the deal. True, I did not take into account incentives that dealers may recieve from financing companies. But generally, cash now is better than cash later, thus purchasing with cash is generally preferred by dealers.
Sorry, but I don't think that is true at all, even in our depressed economy. Financing a bike or car will always be preferrable to a dealer. They don't worry for one second about weather you will default on the loan. That's the financing institutions problem, not theirs. Financing of motor vehicles has always been and will always be one of the main things that keeps most dealerships in business. Cars especially are not selling anywhere near as well as they were at this time last year, so you will see more and more "attractive" financing offers on new cars so dealerships can stay afloat. This is not a cash economy and has not been for some time. A dealer knows he will make out better on the sale if you finance your vehicle through him. No dealer is happy to see a cash customer. Today's economy is all about a good credit rating, not weather you actually have the cash to back it up.
I don't understand entirely what you're saying here...
If the buyer pays cash, then there is no loan for the dealer to "worry about".
In any case, cash is cash - whether it comes from the buyer or from the bank. The dealership (aside of some incentives) won't get rich off of interest rates if you pay with a check from your financing bank.
Financing is always worse - you lose in interest - period. If you can manage to come up with a few grand for a bike purchase, then go for it. If you need to finance, however, try a credit union or the like. Avoid financing with the dealership - that is the same as a credit card, and any boo-boo you make along the way can cause that interest rate to climb as high as 25%. Be careful and read those fine lines.
Cheers,
Loonette
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"But generally, cash now is better than cash later, thus purchasing with cash is generally preferred by dealers."
What I'm saying is that the above statement is nothing more than a false assumption. I'm not saying the dealer is worried. I'm saying he's not. He's no more worried about being paid weather you give him cash or you finance. Cash makes absolutely no difference in that regard, so cash now is not necessarily better than cash later. This is especially true if you finance through the dealer. Then he makes more money off the sale and you become a "good customer" and that is what is truly preferred by dealers. Why do you think there are so many ads for financing on the web from Kawasaki, Honda and Yamaha all touting "special limited time offers" on financing. It's because they want you to go through the dealer to finance your bike. The bike manufacturers get a percentage and the added cost to the buyer in finance charges helps keep the bike dealerships in business. Cash doesn't do a darned thing for them. While there are some people who go to credit unions and the like, that is still considered "alternate financing". The large majority of people who buy new bikes get their financing through the dealership from one of these "special offers" that show up every spring, sponsored by the manufacturers. The previous poster stated dealers prefer cash now to cash later and I think that is false. What the dealer really wants to see is a buyer who will finance through his dealership, as most people do, so he can make additional profit. What he doesn't want to see is a customer who comes into the dealership with cash in hand. He at least wants the opportunity to try and sway you towards financing through him. I am in no way saying it's better to finance a bike. Of course it's not! Paying by cash is better for you, but it is certainly not "preffered" by dealers. They hate the stuff and will NOT give you a deal for using it!
Sorry, but I don't think that is true at all, even in our depressed economy. Financing a bike or car will always be preferrable to a dealer. They don't worry for one second about weather you will default on the loan. That's the financing institutions problem, not theirs. Financing of motor vehicles has always been and will always be one of the main things that keeps most dealerships in business. Cars especially are not selling anywhere near as well as they were at this time last year, so you will see more and more "attractive" financing offers on new cars so dealerships can stay afloat. This is not a cash economy and has not been for some time. A dealer knows he will make out better on the sale if you finance your vehicle through him. No dealer is happy to see a cash customer. Today's economy is all about a good credit rating, not weather you actually have the cash to back it up.
I agree that this is a financing world. But that's largely because people like to spend money that they don't have.
I think that financial institutions are particularly worried about defaults on loans of all types especially now on people with subprime rated credit. In most cases, if you default on one loan, the rest of your creditors will be scrambling to get in on their share of your assets to pay back that loan.
Operating a business essentially comes down to one thing with regards to this discussion: get paid now or later. If I bought a bike from you, would you rather I paid you cash now...or monthly payments plus interest. Wouldn't you rather have the cash to do with what you please?
2008 HD VRSC-DX Night Rod Special
2008 Buell 1125R
TrueFaith wrote:"But generally, cash now is better than cash later, thus purchasing with cash is generally preferred by dealers."
What I'm saying is that the above statement is nothing more than a false assumption. I'm not saying the dealer is worried. I'm saying he's not. He's no more worried about being paid weather you give him cash or you finance. Cash makes absolutely no difference in that regard, so cash now is not necessarily better than cash later. This is especially true if you finance through the dealer. Then he makes more money off the sale and you become a "good customer" and that is what is truly preferred by dealers. Why do you think there are so many ads for financing on the web from Kawasaki, Honda and Yamaha all touting "special limited time offers" on financing. It's because they want you to go through the dealer to finance your bike. The bike manufacturers get a percentage and the added cost to the buyer in finance charges helps keep the bike dealerships in business. Cash doesn't do a darned thing for them. While there are some people who go to credit unions and the like, that is still considered "alternate financing". The large majority of people who buy new bikes get their financing through the dealership from one of these "special offers" that show up every spring, sponsored by the manufacturers. The previous poster stated dealers prefer cash now to cash later and I think that is false. What the dealer really wants to see is a buyer who will finance through his dealership, as most people do, so he can make additional profit. What he doesn't want to see is a customer who comes into the dealership with cash in hand. He at least wants the opportunity to try and sway you towards financing through him. I am in no way saying it's better to finance a bike. Of course it's not! Paying by cash is better for you, but it is certainly not "preffered" by dealers. They hate the stuff and will NOT give you a deal for using it!
If you look up any fundamental financial theory regarding the value of future cash flows, you will understand that cash now is worth more than cash later. If you read my first post, you will realize that the interest spread is what determines whether the dealer makes a buck off of your financing. Although I don't know how Kawasaki's or Honda's financing system works exactly, I'm pretty sure they each have a financing entity and that the dealer doesn't instantly get paid the full purchase price a consumer pays via dealer financing. There's always a trade-off...dealers are provided with financing access at some cost.
2008 HD VRSC-DX Night Rod Special
2008 Buell 1125R
TrueFaith wrote:Paying by cash is better for you, but it is certainly not "preffered" by dealers. They hate the stuff and will NOT give you a deal for using it!
That is probably the most untrue statement to ever be stated on this board. Nobody hates cash especially when that's what you pay your bills with.
2008 HD VRSC-DX Night Rod Special
2008 Buell 1125R
Nick Pimpin wrote: So that's where it ended up... does anybody know what an honest rate is for dealer prep and freight is? I presume dealerships probably rob people all the time when it comes to those items.
$0. I prefer to deal in an "out the door" price whenever I'm working with big ticket items. Is the dealer planning on selling you motorcycle parts in a box that you have to pick up at the factory? You'll notice he was able to cut those charges down rather quickly. That's because they are discretionary charges which the salesperson uses to get back to a price you'd previously negotiated away from.
The main reason I say this, is that it is much easier to get a comparison when you know all of the costs. Basically get a dealer to say, here is your price plus Tax, Title and License which should be fixed charges based on your region. You can then use this price to approach other dealers with. When I bought my bike I actually used the phone a lot more than I showed up to kick tires. If you know what you want, call 6 different dealers with the price you have now and I'd bet they would be willing to beat that price. Repeat this process until dealers say they won't beat a price. (Then maybe ask if they could throw in a helmet or something instead...) After that it's just a matter of deciding which dealership you like best. The one that tried to throw in the setup charges would be at the bottom of my list. Keep in mind, that when you call, the salesmen should feel like they only has one chance to make the sale, and that's if they can give you a price that makes you want to come in. If they ask you to come in before negotiating simply state that you know exactly what you want and really don't need to sit on the bike, you've got another offer lined up and just want to see if they can beat it. They should be willing to work with you because knowing what you want, a few minutes on the phone could represent a very quick sale if you can agree upon a price, just make sure they state that the price as quoted will only have taxes and other regional fees applied.
"I like a man who grins when he fights"
-Winston Churchill
TrueFaith wrote:Paying by cash is better for you, but it is certainly not "preffered" by dealers. They hate the stuff and will NOT give you a deal for using it!
That is probably the most untrue statement to ever be stated on this board. Nobody hates cash especially when that's what you pay your bills with.
Oh really? Tell that to a business that deals exclusively over the internet.
Ask 10 dealers weather they'd want to be paid in full by cash at the time of sale or if they'd like you to finance your bike over time with them. All 10 dealers will opt for the latter. Maybe they don't hate cash, but they certainly don't like it better than you signing a finance agreement. I paid cash for my new Ninja a few months ago and got a $300 markup over MSRP. A month later the same dealer sold the same bike to someone else who financed it - at MSRP. Sure, there's always the possibility the financing will cost him $300 over the length of the loan, but that doesn't make me feel that I wasn't penalized for dealing in cash.
TrueFaith wrote:Paying by cash is better for you, but it is certainly not "preffered" by dealers. They hate the stuff and will NOT give you a deal for using it!
That is probably the most untrue statement to ever be stated on this board. Nobody hates cash especially when that's what you pay your bills with.
Oh really? Tell that to a business that deals exclusively over the internet.
Ask 10 dealers weather they'd want to be paid in full by cash at the time of sale or if they'd like you to finance your bike over time with them. All 10 dealers will opt for the latter. Maybe they don't hate cash, but they certainly don't like it better than you signing a finance agreement. I paid cash for my new Ninja a few months ago and got a $300 markup over MSRP. A month later the same dealer sold the same bike to someone else who financed it - at MSRP. Sure, there's always the possibility the financing will cost him $300 over the length of the loan, but that doesn't make me feel that I wasn't penalized for dealing in cash.
Businesses that deal exclusively over the internet usually are paid via credit card. The financing entity behind that card pays the merchant cash, likely minus a fee for the convenience of using a card.
Most financial professionals will agree that money now is worth more than money later. If any dealer answered your question with anything other than "cash now," they don't act within the parameters of normal business operations. As for the $300 difference between your bike and your friend's: he probably haggled it down further. When you finance, you are able to haggle prices by lowering your monthly payment. That's a good possible reason for the difference there. I highly doubt that you were penalized for paying with cash. How old are you and what do you do for a living?
But to conclude, the notion of cash now being more valuable than cash later is a fundamental building block on which the entire financial system stands. Google it and every sight will say the same thing.
2008 HD VRSC-DX Night Rod Special
2008 Buell 1125R
I think you all are over analyzing this. When you buy a bike from the dealer, he'll make more on the transaction if it is financed since he gets a commision from the financial institution for originating the loan. The dealer gets paid the loan amount directly from the financial institution, so he doesn't care if you default down the road. The only thing the dealer needs to worry about is that you don't default or pay off the loan right away. The dealer will lose the loan origination commision if the loan is terminated within 3-6 months from the sale (term varies by contract).
A friend of mine owned a Kaw/Yam dealership for about 15 yrs. and the income from loan commision was a significant profit center.
interesting...then i stand corrected...i wonder though why would a dealer worry if someone didn't default? If the consumer defaults on the loan, would the dealer lose that origination fee?
2008 HD VRSC-DX Night Rod Special
2008 Buell 1125R
