Motorcycle Finance

**Oscar** · 18th March 2004, 07:34

Deleted due to over zealous moderation on this site.

**Hoon** · 18th March 2004, 10:03

Nice article.....makes me want to buy a house now.

I better keep away from bike shops for a few weeks...you got me exploring possibilities I really shouldn't be

**Slim** · 18th March 2004, 14:39

Oh yes, I remember financing my first motorcycle at the astonishing rate of about 24%!!!

I haven't been anywhere near MTF since and have alternatively used AGC Finance (through the AA for my c@r) and the BNZ Activator card (designed for big purchases and with an interest rate of 12.5%). I don't own my own home, although I have had a mortgage with the BNZ in the past, but my credit rating is so good, that I've never had any problem.

Dealer Hire Purchase
The easiest way to finance your purchase – quick and simple – but probably the most expensive. Being able to provide instant finance helps dealers to sell bikes, but this is a risky proposition from a lenders point of view and is priced accordingly.

There is also the dealer’s margin, which in my opinion is well earned, because most of the time if you don’t pay, it’s the motorcycle dealer gets to make up the difference.

This is how I bought my first bike, using MTF Finance. I had an interesting conversation with Kevin at Hamilton Motorcycles a while ago about this very topic. He told me the horror story of a new Asian immigrant who purchased a motorcycle through a car dealer (it had been a trade-in) and was being charged a wopping 50% interest on the finance, courtesy of the unscrupulous dealer markup applied. He had come to Ham M/Cycles to sell the bike because he couldn't afford the repayments, and truly didn't understand what had happened to him (even when Kevin attempted to explain it to him).

Kevin says that he managed to talk his management into doing away with the dealer markup in all instances and they only charge the approx. 12% that is the standard MTF finance rate. It makes for happier customers and more sales, so everyone wins.

**matthewt** · 18th March 2004, 14:51

Originally Posted by Slim

12% that is the standard MTF finance rate. It makes for happier customers and more sales, so everyone wins.

I've found that the dealer has a reasonable amount of input to the conditions when you deal with MTF. At least they work out the interest like a normal loan, I know of a few companies that loan money for cars and although the rate is good you pay more interest at the start of the loan which means if you want to trade-in before the loan is repaid you're in a bad position (because little of the principal is paid off).

**jrandom** · 18th March 2004, 15:13

Originally Posted by Slim

they only charge the approx. 12% that is the standard MTF finance rate

Yes, I MTF'd the FXR (and my gear) via Holeshot and they put the rate at 15% IIRC. Which was good enough for me, any more and I would have gone to the bank but the MTF form is so easy to fill out and they didn't bug me for annoying bits of paperwork and it wasn't exactly a shedload of money to start with, anyway... so I'm happy.

You know all those Instant Finance (and similar companies) ads they run on TV etc? Those guys charge an actual finance rate of around 40% (and that's WITH security in the form of a charge over a vehicle etc, AFAIK). That's why they're happy to hand out cash hand-over-fist to people who are probably going to head down the road and piss it away at the TAB.

**Rocket** · 19th March 2004, 07:52

thanks for the info. Its quite amazing really. FAI approved my application. And have sent me the papers to sign etc. And no where in the form or the site were the interest rates or any details lol. I guess that arrives via mail, its all to easy. gives me flash backs of the student loan days. But i wont be signing anything untill i have all the info i need to be satisified that what im taking on i can handle.

Cheers for the info. I would like to see similiar articles on insurance, that would be hella handy.

**Drunken Monkey** · 19th March 2004, 08:03

I learned my lesson...21% for the first one, 17% for the second. Nothin but cold, hard cash for the third...Got a good deal tho (thanks, Dave

Figure these days it's pointless to finance a toy, no matter how much I need (*ahem*) _would like_ to have one.

For those of you whom motorcycling is your one and only form of transport, it's a different story. It's acceptable if it's a necessary tool, but don't tie yourself up in repayments - don't want to be so short of cash you have to 'finance' (ie credit card) your next motorcycle service just to get to work(you know who you are!) :P

Anyway, I'm off to the track today, see you later!

**jrandom** · 19th March 2004, 08:39

and another thing - Microsoft Excel is your friend. Use the PMT() and RATE() functions to analyse interest on loans, it's bloody hard to do with a pocket calculator. You can check what a given interest rate will cost, or do the reverse and analyse payments to figure out the real rate behind a deal.

And don't forget to add up the payments to figure out how much the finance is costing you (if you're shelling out $2000 extra over the cash amount, then are you getting $2000 worth of value out of the deal in terms of 'having it now' or easier cashflow, etc?)

Running the numbers for yourself can be an enlightening experience. Like Oscar said, finance can be an excellent enabler, or it can ruin your life...

**Slim** · 19th March 2004, 15:54

Or check out http://www.sorted.org.nz which has all sorts of calculators and handy things on it.

Ps. Finance is like everything else - shop around for the best deal.

**wkid_one** · 19th March 2004, 16:07

Originally Posted by Oscar

1. This means that you can get a two or three year loan for the bike, even though your home loan is over 25 years.

2. The advantages include becoming a cash buyer, thereby improving your negotiating position with your local scooter emporium, and getting lower interest rates and longer terms.

3. Buy Insurance. If paying back a loan on your bike is a pain, imagine what it’s like paying back a loan a bike that was written off or stolen (besides, most HP agreements require insurance).

To answer some of your points in turn

1. This is only any good if you do remember to structure the payments over a short term. If you get conned in to a longer term to reduce the payments - the lower interest rate may be offset by the higher total interest cost you pay

2. This is in fact incorrect and a fallacy. Most dealers now get a kick back for financing a bike which can often be as much or greater than the commission from selling the bike. They would always rather you take finance.

3. YOU HAVE TO HAVE FULL INSURANCE IF YOU FINANCE THE BIKE - it is a term of your contract. As your finance company is an 'interested party' in the contract and is noted as such - they want to ensure that if the bike is a write off - they will recieve the proceeds before you do - and it you lapse your insurance policies you are in breach of your finance contract and therefore they can repossess the bike.

I have worked for both the Banking and Finance industries for my entire working career - and in all honesty no institute wants to realise security, especially chattels security like motorcycles which, given their mobility and risk - have a highly undeterminable value (due to condition) in the event of repossession.

Rather than shopping to finance rate etc - I would recommend shopping to what you can afford to spend. You also have to factor in plenty of other things when working out whether financing your next bike is a good idea
- R&M - tyres, parts etc
- Running costs - Gas, oil, services
- Insurance
These can suddenly make your next purchase seem a lot more expensive than you thought.

IN saying that - it is presently a good time to finance with rates being low. I was offered 11% thru the dealership when I went to buy the R1.

Ask them for a discount - because at the end of the day - they don't get a red cent if they don't sell a bike.

**Oscar** · 21st March 2004, 20:20