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Old school fool
5,720 Posts
Discussion Starter #1
So you’re ready to buy that brand new bike and have the perfect one all picked out. Everyone has either already been or will some day be thinking the same thoughts you are thinking right at that moment. When the gleam of new paint hits you in the eye and the smell of fresh rubber fills your nose it is hard to ignore the call of the open road. Wanting a bike, THAT bike right NOW, becomes a tangible feeling and you need to fill the void in your life as much as a starving man needs to fill his stomach.

If you are like most people, there is no way you have enough sitting in your bank account to pay cash. You are going to have to take out a loan. It’s no problem, you have a good enough job and make enough money to cover the payments so why not go for it and live the dream? You know you want to, but how do you know if it is a good idea?

There are thousands of books printed each year that deal with money management. If you want to research the subject in depth you don’t have to go any farther than your local library. But if you aren't into homework, the best place to begin to assess the situation is with the amount of money you will need. Start with the cost of the bike. Add tax and license. Add full coverage insurance for the life of the loan. Look at how much the bike will cost to maintain over the course of a loan and add that to the total too. Finally, if you are a new rider you will need to factor in the cost of gear - a good leather coat, a good full face helmet, a pair of good gloves and a pair of decent boots that will protect your ankles in a crash are the bare minimum any rider should have. If you plan on riding agressively, factor in a full suit. If you live in an area subject to inclement weather, add cold weather and rain gear. If you live in an area that gets hot, add summer gear. Altogether it can add up to a tidy sum and that alone might curb your desire.

Next, decide how much you have to finance. Believe it or not, some riders finance almost everything I listed in the paragraph above, they even put the service fees on their credit cards. Other people are choosier about what they finance and they end up paying the bank considerably less in interest. Less is better when deciding what to fianance, but the goal of this exercise is to get a realistic total so don't hold back on including things to get yourself a lower number.

Once you have your total, use an online loan calculator to determine the amount of interest you are looking at over the life of your loan. Now take a deep breath and consider the number. Do you feel comfortable with it? Play with the percentage points and note the differences, determine how much is acceptable. Then go looking for a loan.

Start with a credit union, they usually offer the best rate. Credit unions have rules, of course, and one of them is you have to be a member. However, just because you aren’t already a member doesn’t mean you can’t become one. Check the rules, some credit unions affiliated with companies only allow the employee or their spouse to join, but others might allow children or other relatives. Until you fully research te requirements you will never know. Look at what they are willing to loan and what interest rate they want, compare that number to the number you decided upon after looking at the loan calculator - if it is less, you might be in business. If it is more, you might have to seriously consider giving up your dreams right there.

Next, look at what kind of deals the banks are offering. Compare that with the bike manufacturer’s loan plans and see if either one of those meets your requirements. This is a good time to mention personal loans, “manufacturer’s credit cards,” and other high interest loans that might leave you holding the bag. Avoid high interest rates, if you can't get a reaonable loan don't get one at all. Sometimes a dealer will recommend one of these as a way of avoiding full insurance, if that happens, don’t just walk away, run. He has just told you that making a buck is more important than helping you. Unless your bike is going up on a pedestal inside Fort Knox you’re going to need insurance, and in the real world that means full insurance on a new bike, to cover you in the event of theft or other casualty. Don't take the bait and run the risk of getting stuck with no bike and big payments.

Cut the best deal on a loan you can and remember to keep your eye on the total cost. It is a common salesman’s trick to get the customer looking at the monthly payment and draw attention away from the total cost. If you forget about the total it’s easy to get caught for add ons or other costs that will take you above what you have budgeted. Stay within your budget at all costs! When you get everything set just the way you want it, take your new baby home to meet the family.

Easy, huh? It can be when you get what you want with just a few simple steps, but there are other times you have to fight your hunger, use some will power and walk away with nothing but your respect and your future earnings intact. If you can’t get the deal you want, don’t stretch or play with the numbers to make things work - it is a sad fact of life that sometimes your credit rating and interest rates combine to put a purchase out of reach, accept it and move on. It's probably for the best anyhow.

Another time to walk away is when you are already in over your head. Never roll one loan into another. If you can’t pay off one bike, adding the remaining balance to the next loan will only dig you in deeper. You will be absorbing the depreciation of one bike’s value while paying out the nose for interest for the previous bike. The longer you finance anything, the more you are going to ultimately pay. What is more, if the worst thing happens, you find yourself down on your luck and need to sell your bike, you will need to so much money from the sale that no one will buy it. You'll either be stuck with the loan or get a visit from the repo man.

Money is a complicated matter and this article should really be a starting point, not a step-by-step guide. Smart people do their research before throwing money around - especially if they have to borrow to do it. Be careful, use your best judgement and always remember that some times in life, for your own good, you have to deny yourself the things you want. Always remember that today’s perfect bike is tomorrow’s old used one that nobody will want and that you can have it for a fraction of the cost if you wait just a few years - look at me.
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