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 Purchasing
and Insurance |
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| Financing
vs Cash |
by Richard
Rose
Associate Editor
Beginner Bikes Magazine
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| This
is a big decision to make for just about any large purchase, so
no surprise it's worth considering on a motorcycle too. Here are
the pros and cons of both. |
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| Financing: |
Remaining
cash in the bank after any down payment can be used or invested
elsewhere (don't forget about license and insurance). Financing
can help establish credit for those with little credit history,
ask about first time buyer programs. Special low APR financing can
make this form of purchase more affordable, especially at today's
rock-bottom rates. |
In
the long run, you'll be paying more than the sticker price due to
the finance charge. You won't recieve the title until the loan is
paid in full, which in some states can mean higher insurance rates.
Depreciation can affect the equity of your loan too, so if you're
buying any extended warranties on a new bike you can be upside down
for quite some time on your purchase. |
| Cash
Sale: |
No
additional cost and no monthly payments. Lower insurance coverage
permitted as you recieve the title right away, so if you opt for
simple liability only without the more expensive collision and comprehensive
polices this is an immediate option. |
With
today's cut rates it almost makes more sense to take advantage of
the low payments, which looks pretty good if money seems a little
tight for you. With a big lump of cash tied up in a bike purchase,
it will leave you with a lot less coin for those rainy days when
you wish you had some more. |
| Insurance |
Check
on this before buying the bike, can you afford the
rates? If you're 21 and single and looking to get
a sportbike, don't expect a fair rate, $4000+ per year is a common
rate for new liter+ sport bikes in any age bracket (and even a
600cc sport bike can get upwards of $3K per year on a new bike),
assuming the company will insure them at all. Some bikes are just
plain expensive to insure due to their higher theft rate, their
parts are quickly and easily sold or swapped behind closed doors
while others are simply targets for joy riders. You can get better
rates on bikes that are 7 model years old or older, the next break
comes at 25 year old riders and again at 29. Check with several
companies, some of the companies are quite competitive for MC
rates. Bottom Line: check first as you don't want to bring a bike
home and then find out you can't afford the insurance.
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