"Unleash the Red Within" - Special offer from Ducati!

[Monsterlover]

The crash argument is also stupid. Any lien holder makes the buyer carry full coverage insurance. If you crash it, the loan gets paid off. Not carrying full coverage insurance on a high $$ bike is stupid...regardless of how the bike was paid for.

For the purpose of educating the masses I need to point out that you're only partially correct.

It is correct that if you finance you have to carry full coverage.

However, if you crash it and total it the bike does not necessarily get paid off.

They will pay book value on the bike.

If, for some reason, the bike is worth less than what you owe (ie it's worth 6K and you owe 10K on it) you will then be responsible for repaying that $4000 all the while having no bike to play with while paying that back.

The only way to avoid that is gap insurance (which is pretty cheap)  That way if something ever happens and you owe more than what the insurance company pays out the gap coverage will pay the difference.

The other way to avoid that is to not get behind the 8 ball to start with.

Personally I have no problem financing.  I like cash in my hand for as long as possible.  Id rather pay every month and retain a pile of money in my bank account.  The last bike I bought I put down 40% on and financed the rest.

It's a happy medium between full finance and paying cash.

[Howie]

IMO, if you are buying a toy it is desirable be able to pay for it up front.  Does that mean you should?  Depends.  In my case, it would mean going into investments that are earning more than 3.99%.  Therefore I would take advantage of the loan.

[mstevens]

Yeah, there's the opportunity cost of money.

I can afford to pay cash for whatever I buy (else I don't buy it). That doesn't mean I always do pay cash. Very often, the financing terms I can get mean that I can comfortably leave money elsewhere, building up compound interest, remaining available for unforeseen needs, or doing other work. For example, I have a 15-year mortgage on my house and had loans for our cars. Paying cash for those things would have wiped out any cushion we had. Interest is a cost that I am willing to pay in some cases in return for certain advantages.

In this debate, I believe both sides are right. It's really dumb to use borrowed money to buy something one can't afford. It can be really smart to use borrowed money in order to gain greater control over how your money is flowing and what it's doing at a given moment.

Borrowed money is a tool just as non-borrowed money is a tool. Sometimes it's highly appropriate to use it, sometimes not.

In putting my money where my mouth is, I plan to finance the purchase of my MTS1200S. A brief loan at low interest (my bank beats the Ducati promotion by a small margin, so the fact my bike isn't included doesn't matter much) will just make things smoother and less complicated. I wouldn't buy the bike if taking out a loan were the only way I could afford it.

[muskrat]

I agree completely MStevens!   

[Triple J]

It's a happy medium between full finance and paying cash.

Of course. If someone has to finance the entire purchase price, which could lead to being upside down immediately and the insurance problems you mention, then they can't afford it.

Do they offer gap coverage on motos? I've seen it for cars...but never motos (never asked though).

[Popeye the Sailor]

Of course. If someone has to finance the entire purchase price, which could lead to being upside down immediately and the insurance problems you mention, then they can't afford it.

Do they offer gap coverage on motos? I've seen it for cars...but never motos (never asked though).

They do. And yes, Mstevens nailed it, as per usual.

I do so hate watching some of my friends upside down on bikes they no longer want, but cannot afford to sell. I'd say bare minimum if you *must* buy a bike one should put down enough up front so they are never upside down on the loan.

As far as the getting one before you're too old to ride one-well.....

http://www.youtube.com/watch?v=XIX0ZDqDljA&feature=related#lq-hq-vhq

[cyrus buelton]

I enjoy best buys credit card with zero percent interest for 36mons on qualifying purchases.


I bought my TV with that method.

Then the cash I could have paid is earning interest in a CD right now.

When it comes due, I pay the remainder of the TV.


I'll use and abuse zero percent and invest my money in a different way to make interest off the company giving me that rate.

[Triple J]

one should put down enough up front so they are never upside down on the loan.

Yep...and make the largest payment possible every month to pay off as quickly as possible.

[Drjones]

Again I'll say that if you can make a payment to a bank for then you can make a payment to a money market account.  This is payment money, so how does it impact safety cushions?  I mean you're making a payment to a bank to avoid dipping into an emergency fund and some how you can't make a payment to your MMA to avoid dipping into an emergency fund?

Sure if you're in the loan-purchase loan-purchase cycle then it will mean keeping the purchase for a couple of years longer before the next purchase to break the cycle, but you  . . only  . . have  . . to do it  . . once in your life.

How does it tie into the OP?  Down a few posts.  "Well my interest was only $30/mo for 18/mo."   Well that was $540 you sent to the bank instead of "insert dealership here" for accessories.


Think long term.

[mstevens]

Again I'll say that if you can make a payment to a bank for then you can make a payment to a money market account.  This is payment money, so how does it impact safety cushions?  I mean you're making a payment to a bank to avoid dipping into an emergency fund and some how you can't make a payment to your MMA to avoid dipping into an emergency fund?

Sure if you're in the loan-purchase loan-purchase cycle then it will mean keeping the purchase for a couple of years longer before the next purchase to break the cycle, but you  . . only  . . have  . . to do it  . . once in your life.

How does it tie into the OP?  Down a few posts.  "Well my interest was only $30/mo for 18/mo."   Well that was $540 you sent to the bank instead of "insert dealership here" for accessories.


Think long term.

I do think long-term.

I also think in terms of liquidity. Cash, per se, does little work. I try to keep some on-hand, but most of my money is invested. To pull money out of investments can cost more than current interest rates both in terms of fees and in terms of what it could have earned if left alone.

"Cushions" are affected any time they are used. The only cash ("money market") I keep on-hand, and that's as inviolable as possible, is 6 months' living expenses. If I take $20k out of current income to buy a bike, that means little is left for other expenses. Realistically, that translates to selling assets or liquidating investments, which in my case is at least as costly as borrowing, or using my cash cushion, which violates my financial plan.

You appear to be thinking in terms of "saving up" by making payments to oneself then withdrawing a lump sum for a planned purchase. That's fine. It may not always be the best use of money, but it's fine. For one thing, future prices are not entirely predictable. Yield on saved cash tends to be very low and my investments earn more than money market rates or vehicle loan rates.

Sure, patience is a virtue. On the other hand, time marches on. The only time I can ever be certain of is right now. I know too many people who scrimped and lived frugally right up to the stroke and never enjoyed the fruits of their labors. Appropriately-used credit can mean the ability to do something now instead of later - it's a trade-off of a small amount of money for time, which is irreplaceable.

Sure, inappropriately-used credit can be very dangerous. Always using credit leads to focusing on payments rather than costs and a high risk of lifelong debt. That's not what I and many others do, though.

Even though most would agree that anyone who ever pays interest on a credit card should avoid taking on any additional debt until the credit card is completely paid off, I've had to put a large expense (an entire year of medical school, including books) on a credit card when unexpected events meant it was necessary. (Yes, I know bikes depreciate in value while my medical degree probably doesn't.) My life is arranged now so that sort of thing is extremely unlikely ever to happen again. One of several financial tools I use to that end is credit.

That's why I took out a mortgage on my house instead of paying cash. That's why I occasionally borrow to purchase cars or bikes. I'm not in a "loan-purchase cycle." I use credit judiciously as a tool. That's why it exists.

[mstevens]

I'd say bare minimum if you *must* buy a bike one should put down enough up front so they are never upside down on the loan.

 

[Drjones]

Any investment that earns more than a MMA involves the risk of losing a portion or worse the entirety of the investment or is locked up in long terms to where one can't get to it easily.   Risk is a personal call of course.

[Goat_Herder]

I'd say bare minimum if you *must* buy a bike one should put down enough up front so they are never upside down on the loan.

Precisely.  Think it thru and evaluate your financial situation objectively.  Nothing is wrong borrowing money to purchase an item.

[mstevens]

Any investment that earns more than a MMA involves the risk of losing a portion or worse the entirety of the investment or is locked up in long terms to where one can't get to it easily.

I agree about the risk as well as being illiquid. The latter mitigates (but doesn't eliminate) the former. Long-term investing works vastly better than short-term.

[Dave R]

Guess what!!??  Ducati is offering a store credit that can be used to reduce the cash price of a new Ducati or toward anything else the store offers! Here's the list!

$1500 Store Credit for the Following Models ($1,750 CDN):
2010 Ducati 1198 R Corse model
2009 Ducati 1098 R Troy Bayliss model

$1250 Store Credit for the Following Models ($1,500 CDN):
2010 Ducati 1198 S and 1198 S Corse models
2009 Ducati 1198 S model

$1000 Store Credit for the Following Models ($1,150 CDN):
2010 Ducati Hypermotard EVO SP, Streetfighter, Streetfighter S, Monster 1100 S ABS and 1198 models
2009 Ducati Streetfighter, Streetfighter S, Multistrada 1100 S, Sport 1000 Biposto and 1198 models

$650 Store Credit for the Following Models ($750 CDN):
2010 Ducati Hypermotard EVO, Monster 1100, Monster 1100 ABS, Monster 1100 S, SportClassic GT1000, 848 and 848 dark models
2009 Ducati Monster 1100, Monster 1100 S, Hypermotard 1100, Hypermotard 1100 S , SportClassic GT 1000, SportClassic GT 1000 Touring, Sport 1000 S and 848 models

$400 Store Credit for the Following Models ($500 CDN):
2010 Ducati Hypermotard 796, Monster 696 and Monster 696 ABS models
2009 Monster 696 model

Yeah and there is still that crazy low rate finance offer going...   but who needs that!