Should you expect a discount if paying cash for a motorcycle

[RhadamYgg]

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.

This is weird, because when I was in training to be a car salesman in North Carolina, they explained the whole process. Basically, there are no gifts. The dealership owns those vehicles and get a sweet low-interest interest only payment. So, if you pay cash the sooner you remove the bike from the lot - as long as it is before the next months payment - the sooner they stop paying for that bike.

RhadamYgg

[RhadamYgg]

In my experiance,
last week I went to a Kawasaki dealership to look at the Vulcan 500.
The MSRP on the bike was $5040.00.
I said whats the best price out the door for this bike?
he ran through tax, title, mv, ect ect.
and it was nearly$6000.00

I put $500.00 in cash on his desk and told him I would be back in an hour with $4000.00 more in cash if he would take that for the bike.
He said thats not enough and read the list of fees to me again.
I picked up my money and started to walk out he said sorry we can't help you out.by the time I got to the door I could hear his father(the owner)
asking him if he was crazy, he chased me out into the parking lot and said he wanted to talk to me I said too late I'll keep my old bike and play alot of golf.
and thats how I decided to keep my 93 Nighthawk

That is a neat story. Too bad Sam's club doesn't do motorcycles the way they do cars and stuff. I'm one of the dysfunctional negotiators that needs that kind of help.

RhadamYgg

[jstark47]

That is a neat story. Too bad Sam's club doesn't do motorcycles the way they do cars and stuff. I'm one of the dysfunctional negotiators that needs that kind of help.
RhadamYgg

Rhadam - the way I look at it, if you're buying a Moto Guzzi or a MV Augusta or something like that - you got to take the deal given to you. But a Japanese Big 4 bike? In Jersey they have dealerships all over the place. Definitely opportunity to play one off the other.

[flynrider]

[
This is weird, because when I was in training to be a car salesman in North Carolina, they explained the whole process. Basically, there are no gifts. The dealership owns those vehicles and get a sweet low-interest interest only payment. So, if you pay cash the sooner you remove the bike from the lot - as long as it is before the next months payment - the sooner they stop paying for that bike.

RhadamYgg

These days, a dealer can get finance approval from a lending instution pretty quickly. They get their money pretty quickly whether its a cash or credit deal. Cash doesn't get the bike off the books appreciably faster.

On the other hand, if the guy in the finance department can get a point of all the loans they originate (not unusual, some get more), that adds up to a tidy sum.

[flynrider]

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?

Yes. The terms vary between dealers and lenders. At my friends shop, the loan contract had to remain in force for a period varying from 3 to 6 months (depending on the lender). Default or early payoff meant that the he would have to give back the origination fee. In other words, if he were in the habit of originating bike loans to likely deadbeats, the lenders would make sure he wouldn't profit from it.

[RhadamYgg]

That is a neat story. Too bad Sam's club doesn't do motorcycles the way they do cars and stuff. I'm one of the dysfunctional negotiators that needs that kind of help.
RhadamYgg

Rhadam - the way I look at it, if you're buying a Moto Guzzi or a MV Augusta or something like that - you got to take the deal given to you. But a Japanese Big 4 bike? In Jersey they have dealerships all over the place. Definitely opportunity to play one off the other.

hmmmm - there are a bunch of dealers. But the first one I started out with - wouldn't give me a written quote to work with.

RhadamYgg

[RhadamYgg]

[
This is weird, because when I was in training to be a car salesman in North Carolina, they explained the whole process. Basically, there are no gifts. The dealership owns those vehicles and get a sweet low-interest interest only payment. So, if you pay cash the sooner you remove the bike from the lot - as long as it is before the next months payment - the sooner they stop paying for that bike.

RhadamYgg

These days, a dealer can get finance approval from a lending instution pretty quickly. They get their money pretty quickly whether its a cash or credit deal. Cash doesn't get the bike off the books appreciably faster.

On the other hand, if the guy in the finance department can get a point of all the loans they originate (not unusual, some get more), that adds up to a tidy sum.

Oh, yeah, I can see that. And since the finance guy might pass on some dollars to the sales person... Everyone's happy (not the customer) because hidden in the loan is extra cash for everyone.

RhadamYgg

[koji52]

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?

Yes. The terms vary between dealers and lenders. At my friends shop, the loan contract had to remain in force for a period varying from 3 to 6 months (depending on the lender). Default or early payoff meant that the he would have to give back the origination fee. In other words, if he were in the habit of originating bike loans to likely deadbeats, the lenders would make sure he wouldn't profit from it.

Gotcha...thanks for clarifying. I don't have the low-down on how the dealer - financing company relationship works. I feel though that the dealer makes good on that relationship though as they have no real large risk of losing money - only the origination fee.

[evil_lies]

hi all! i've been lurking for a few weeks. I don't currently ride, but have been bitten by the bug. I just wanted to throw out my 2 cents. why not go in planning to finance unless they will give you a cash discount, then pay off the loan on the first billing statement (as long as there is no early pay off fee)? admittidly, i've never bought a new bike, i've got an '83 honda ft500 i'm trying to put back together for a little riding this summer .

[RhadamYgg]

hi all! i've been lurking for a few weeks. I don't currently ride, but have been bitten by the bug. I just wanted to throw out my 2 cents. why not go in planning to finance unless they will give you a cash discount, then pay off the loan on the first billing statement (as long as there is no early pay off fee)? admittidly, i've never bought a new bike, i've got an '83 honda ft500 i'm trying to put back together for a little riding this summer .

Welcome! I only just joined recently myself, and I've found this is a really good group.

I don't see a problem with that, but the extra expenses in getting a loan will all be absorbed by you. You should keep your money if you get the loan - and save it. Use it for something else or get interest off it or something.

RhadamYgg