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How much extra are you prepared to pay?

Discussion in 'New Riders and Riding Tips' at netrider.net.au started by WowlTurkey, Aug 17, 2008.

  1. Just curious, I know with every good thing there's a bad thing - finance/loan = more interest.

    However, as some know I was looking at the Ninja 250r. ORC is around $7500. When I was asking about finance, they quoted 180 per month for 60 months. this comes to almost $11000... HUH? am i missing something?
    Is interest usually at a high rate for financing?
  2. That's working out to around about a 15.4% interest rate over the 60 month period.

    That seems a little high to me.

    Don't really know what interest rates are like for financing nowadays, but I would think that if you shopped around you could find something in the 10-11% range. Heck, I think even the Aussie Home Loans credit card has interest rates of about that.

    At 11%, and at $180/month, you'd have the bike paid off in 52 months, or $9360 in total.
  3. ZOMG! News flash! Buying on credit costs more than paying cash. :shock:
    Take into consideration depreciation, and now you know why smart people do not finance things like bikes. You end up paying double for something you end up selling for half.....

    Regards, Andrew.
  4. Credit is a tool you use if absolutely necessary, imo. The whole interest thing is a massive boo-urns.
  5. I, myself, am not a fan of credit, but as you say, sometimes needs to be used if necessary. so, say i get it on finance and pay like $3000 straight up, would that halt payments for a while? would it allow me to pay off sooner and not pay as much interest. I know in some cases, if not most, if you pay it all out you get hit with an exit fee as well as paying the amount of interest left owing!?!?!?! if that makes sense?
  6. If you have 3k I see no reason why it would be necessary to borrow more to buy a 250.
    If you pay 3k off on your first payment it will not halt your payments or lower your monthly payments, you would pay less interest and the term of the loan would be shorter. You have to weigh up the savings with how much you get hit with for early exit fees (if you are dumb enough to actually sign up for a loan with that bullshit).
  7. Credit is much more expensive than it was 12 months ago, not just reserve bank rates and mortgages but consumer / small business credit particularly. In the end the $10k loans go back to big lenders and they get their money from bigger lenders. There's less money floating around so they can be picky about who to lend to and how much they charge for it.

    If you're a good risk and have access to it then a low interest credit card may be a better option.

    In your case I'd guess the lender will buy the money they lend for your bike at about 10% and lend it to you for 16%. On a deal of $7,500 that means they get about $1,000.00 in total. For that they have to process the contract and administer it for 5 years, chances are they have to put a little of that aside with every person to pay for those that default. I imagine motor cycles probably have a fairly high default risk.

    Sometimes dealers will offer promotional interest rates that range from zero to whatever. This is almost never something they get from the finance company, what it means is they sell to the finance company for a cheaper price. In nearly all of these cases you are better off to shop for your credit first, find the best loan you can and go in with cash in hand. (and haggle down the sticker price accordingly)
  8. Rule of thumb, don't get finance from a bike shop.
  9. I looked into financing a new CBR125R or a new 250 or something.

    Then I bought a used bike for $3k.
    I went in, to a Honda dealer whom I won't name and they 'did the numbers' for me on a 125.

    They wanted a $2k deposit, and then $48 a week for 5 years.
    Thats a total of over $14k. For a CBR125R.

    I told them I would think about it lol.
    Seriously, who in their right mind would EVER agree to that?
  10. not really for a bike store credit. the banks are doing 14.6ish % and uni credit union is about 13.6ish, so for a bike store (which doesnt take establishment fees, loan insurance or monthly fees to charge 15.4% sounds about right.

    btw, did you calculate that as simple interest or compound?

  11. LOL. so naive.
  12. Don't take out a loan for your learners bike. Save the cash and buy what you can afford. It took me about 10 months of hard work and very tight budgeting to get enough money for my bike, but in the end it was definately worth the wait.
  13. Compounded, but interest calculated per month.

    If calcuated and applied daily, the interest rate works out to bang on 15.0%

    An Aussie Home Loans Credit Card is 11.99%. If you can apply for and get a $10,000 limit, then you could buy the bike on your credit card.

    At 11.99% compounded daily, and at $180/month payment, that works out to 55 months, or $9900

    Alternately, pay it off at $250/month, and you'd have paid it off in 36 months, for $9000 total, with the Aussie Credit Card.

    Not that I've got any interest in Aussie Home Loans, I'm just using them as an example that even a credit card interest rate is less than the financing deal on offer. Provided you had the income, if the OP wanted finance, he'd do well to shop around for the best credit card rate and he'd still be ahead.

    Better still, as suggested above, shop around for a decent personal loan in the 10-11% credit rate range, and walk into the shop with cash-in-hand bargaining power.
  14. Do your sums.

    Also, look around. You should be able to find a variable interest rate loan, which has a minimum repayment and maximum term, but no minimum term. It should allow you flexible repayments. The interest rate is higher, but if you knocked the loan off in half the nominal term (or less), you wouldn't pay anywhere near as much interest compared to the secure loan fixed repayment schedule. You MUST be disciplined though.

    Get friendly with the various calculators about the place, like at http://au.pfinance.yahoo.com/calculators/index.html to work out your situation.

    By the way, 15%pa for finance is not unusual right now.
  15. If you have $3k up front, then buy a bike worth $3k.

    No interest on cash purchases, save $180p/m towards the next bike!
  16. how much negotiable are they

    I havent ever bought a new bike from a dealer yet..how much negotiable are they if you can pay in cash. For eg, for a $15k bike, would it be insulting to start negotiating at $13k?
  17. You can get an NSR150 for $3k ;)
  18. infochoicedotcomdotau will help a great deal.

    Im in the same boat. Would love a new Ninja, but is it worth the money and time?
  19. The finance company is screwing with you. Your getting charged a high interest rate because you either don't have any brick/tile assetts, under the age of 28, anything less than a gold plated credit rating or any combo of the above.

    If you had all of the above, you could get a rate between 10-11%, but if you had all of the above you wouldn't need to finance 7 kay anyway.

    Try to scratch up all the deposit you can and make extra repayments when you can. Paying it off early is the key to saving on the overall total amount repayed.
  20. Getting a first bike on finance is just silly IMO. Getting anything that depreciates on finance is silly. Pay what you can afford and save the rest for your next bike. Otherwise you'll end up being 5 grand or more out of pocket by the time your loan is up (and thats just if you don't crash it)