Can someone explain to be what financing payment option is? | GTAMotorcycle.com

Can someone explain to be what financing payment option is?

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Seej95

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I apologize for my lack of knowledge as I wasn't ever taught this... From what I think it is, financing is when you pay the fee monthly with interest, and you are only eligible if you have a good credit history. So say you were purchasing a bike with the sales price of $6000, and the dealership demanded an interest rate is 4% for a 12 month period. So would you have to pay $520 a month ($6000/12=500 x 0.04= $20 + $500= $520)?
And there is an interest rate because the dealership is allowing you to pay a monthly rate instead of buying the whole bike...
Is this what financing is?
And is financing a better option than buying the whole bike and owning it forever?
 
You are buying the whole bike, but paying for it in installments. And for that you pay an interest charge. In the end you pay more. If you don't pay, the bike gets re-possessed by the bank that is giving you the financing.

Seej95 said:
....And is financing a better option than buying the whole bike and owning it forever?
Click to expand...
What you are describing here is leasing...like for cars. Basically it's a long term rental, so no ownership. Don't know if anyone leases bikes.
 
Seej95 said:
I apologize for my lack of knowledge as I wasn't ever taught this... From what I think it is, financing is when you pay the fee monthly with interest, and you are only eligible if you have a good credit history. So say you were purchasing a bike with the sales price of $6000, and the dealership demanded an interest rate is 4% for a 12 month period. So would you have to pay $520 a month ($6000/12=500 x 0.04= $20 + $500= $520)?
And there is an interest rate because the dealership is allowing you to pay a monthly rate instead of buying the whole bike...
Is this what financing is?
And is financing a better option than buying the whole bike and owning it forever?
Click to expand...

my policy with boats, motorcycles and other non essentials is only pay out wright for them.
my current truck is the only vehicle ive had a loan on in my life. save up, buy what you want then start saving for the next one... i just happened to go way over budget on the truck purchase but it was worth it.
 
First, I fully agree with EaZ8... toys and other non-essential items are best purchased with cash....

But, since you asked. Financing is a term that covers many things (loans/leases/lay away/etc) and not all are created equal.

For a loan, while your calculation above is close, it's not correct as the interest is charged on the full principal amount outstanding at any time. Here is a link to the TD loan calculator https://www.tdcanadatrust.com/loanpaymentcalc.form?lang=en

There are usually "fees" associated with loans that further increase the price. You don't mention who is offering the financing but you'll find many companies charge a Processing fee, PPSA Lien registration fee and may try to include other non-essential items (life insurance?) to the loan. With a loan you may also be required to fully insure the bike (coll/comp/plpd) to a level you hadn't originally planned on.
 
So pretty much, the best less hassle way would be to save up and purchase the whole bike on the spot to prevent further financial issues in the future...
 
Seej95 said:
So pretty much, the best less hassle way would be to save up and purchase the whole bike on the spot to prevent further financial issues in the future...
Click to expand...

This should apply to most things you purchase, not just bikes. It will keep you out of the debt pit that a lot of people fall into. You do what's best for your financial situation. Good on you for at least asking these questions.

In the mean time, save up, when you have the cash in your hand, go and get your bike. Also, if a bike is financed, insurance companies will want Full Coverage on the bike until it's paid off, those rates are a shock to most first time buyers as well, so check insurance too.
 
Seej95 said:
So pretty much, the best less hassle way would be to save up and purchase the whole bike on the spot to prevent further financial issues in the future...
Click to expand...

Yes as explained above if your buying a bike with loan or "financing" you will be required to get collision insurance, (so the lender gets the insurance cheque to pay off bike).

Plus if your a new rider chances are you will be looking at get a 125 - 300 cc bike you may find that after 1 - 2 seasons you want to upgrade. Then you will end up doing what so many others do tryong to sell the bike for what is still owning on it, and not what it is truly worth. (Depending upon lender, most of the interest or finance charges are at beginning of loan).

As a new rider. IMHO it is much better to buy a used bike and see how you enjoy it then if you want new buy it as second third or fourth bike. Remember NEW bikes depreciate, (lose more of their value), quicker than a used bike.
 
The only time it makes sense (to me) to lease a toy is if you have a big enough business to incorporate the write off.

The only other time I "hear" it's a good idea is from auto industry guys trying to sell ya into one.
 
meme said:
The only time it makes sense (to me) to lease a toy is if you have a big enough business to incorporate the write off.

The only other time I "hear" it's a good idea is from auto industry guys trying to sell ya into one.
Click to expand...


I'd never heard of leasing a motor vehicle until I came to Nth America. I was used to purchasing and financing through a Bank downunder. You wouldnt go through the dealershiips. Their interest rate was higher than the banks.
 
For some folks that engage into a loan will end up with buyers remorse.

The residual value of the toy plummets,

The cost to insure.

The cost to maintain.

Drop the bike? Cost to repair.

Maybe get a ticket?

Cost of insurance increases.

Claim for dropped bike?

Cost of insurance increases.

Park the bike.

Each monthly payment is dragging.

Look to sell.

Balance owning is greater than what you can sell the bike for.

Don't pay the loan.

Ruin credit rating.

Banks and dealerships don't offer great rates for toys because of the risk of the customer and because the toy typically depreciates greatly.


If you have home equity or financial assets, you can typically qualify for a line of credit at a prime rate. Even then, the rate is dependent on prime so, if it goes up, the interest goes up, the payment goes up.

What is the positive spin on this again?

Want to play? Gotta pay.
 
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