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Motorcycles and debt/borrowing

Discussion in 'General Motorcycling Discussion' started by josh_182, Jul 19, 2015.

  1. Hi guys, just curious about what sort of debt some of you have due to your love of motorcycles.. So I own a 2014 street triple and have had it for 14 months and I'm considering a new bike, I'll sell or trade the street but would still be looking at borrowing another 8k to fund the bike I'm dreaming of, putting my personal loan at 19k. On forums you hear stories of guys that yearly trade last years new bike and get something else but surely after a few rounds the debt just gets deeper and deeper. Just wondering if anyone hear gets a new bike every couple of years and how it works for you?

  2. I personally walk the most painful but safest path. I never borrow EVER simply because I hate being in debt. I usually save up the money & then buy the bike I want.
    • Agree Agree x 10
  3. Yep, if I can't pay cash, I don't buy. My last bike was $33k, it just turned a year old and I'm looking to flip it for a 16, possibly 17 model and am just considering right now another $30k bike purchase.

    You are right in saying anyone financing new bikes and flipping them annually will soon rack up a significant debt over and above the value of their subsequent bikes, as they will almost always incur a negative equity in the last one.
    • Agree Agree x 1
  4. Geez I didn't think there'd be too many people able to afford to continually pay cash for theirs either, with mortgages and what not.. Lucky guys!! Maybe I stick with the street for a couple more years, if the loss was only 2k at a time it might be ok, but 8k is a good chunk of coin!!
    • Agree Agree x 2
  5. The depreciation is almost always going to hit the first owner hardest. I will lose maybe $10+k on my 2014 bike, but that over 2-3 years isn't so bad. You just have to save what you think the difference between sell price and price of new bike in 3 years will be, and you can easily keep paying cash.
    It's only about $3-4k per year for me. The hardest part is buying that first brand new big bike with cash. It helps that I don't have any annoying little pricks of kids. I'm thankfully allergic to them!
  6. 1 vote for cash only.

    I guess everyone's tolerance to debt is different but I've never understood the psychology behind taking out a loan for a depreciating asset? I'd understand if it were for investing, buying a house, or business tax write-off but never for something like a personal vehicle.

    Only had my license for 4 years and gone through 4 vehicles (2 cars & 2 bikes) so on average 1 vehicle flipped every year but depreciation hit wasn't too bad because it's always been second hand (except my current bike).

    Those people on forums that get new bikes every year are probably just well to do/advanced in their careers. Doing that through financing is a sure fire way to end up bankrupt I would think.
  7. This is just personal opinion but if is your primary form of transport - then IMO borrowing can make sense. However, borrowing for a vehicle for leisure isn't something that I would do.

    For those on mortgages it can be a little different as many throw any extra savings they have into an offset account to save on interest - so using money they have saved up in offset can be equivalent to paying cash. For those in that situation - everything is a decision of mortgage vs spend.

    The other time personal loans can make a lot of sense is when you get a 0% comparison rate - i.e. over 4 years paying no interest whatsoever.
  8. I've paid cash for every car/bike I've owned. That's only a couple of bikes, but easily close to 30 cars.

    Currently own a couple of bikes and 5 cars, all outright. Only debt I have is a mortgage.
  9. I'm terrifying at getting in debt so I tend to just save(took me over a year to save $10k, though:cyclops:)
    But I've never bought (and probably will never buy) a brand new motorcycle, the depreciation would just kill me.
    I'll also probably never have a good enough job to even get finance :bag:(although I hear they'll finance just about anyone these days, I know someone on centrelink with a learning disability who owes $30,000...)
  10. If your going to take that approach to buying bikes in finance your going to want to be making more than the minimum repayments or otherwise you end up in the situation your in where you owe more than what the bike is worth. Alternatively you could pay more in cash and the balance in finance. Your looking at a debt spiral if you buy a new bike alreafy having a considerable loan.
  11. Same boat, every bike I've bought privately second hand with cash. Really don't see the appeal of buying a bike brand new when the same model +2 years is 2/3rds or 1/2 the price
  12. All those guys saying it's stupid to buy new and they prefer buy used. Remember someone has to buy them new and wear the depreciation. So don't discourage the brand new buyers :p
    • Like Like x 4
    • Agree Agree x 2
  13. the golden rule is to never borrow money for something that will depreciate. nearly everyone breaks that rule, making banks and finance companies obscenely wealthy. If you cant afford to pay cash you cant afford it. Especially for 'toys'.

    However, If you must have the latest and greatest, or just the latest, Make sure you can afford the repayments if you lose your job. something about chickens and eggs comes to mind.
  14. Live within your means. That's the only way to get in a position where you can get extravagant.

    If you keep increasing debt because you want something you will never get your self into a comfortable position.

    You sound like you could use some help from a budgeting service because this kind of spending will send you into bankruptcy if you have a small hiccough.
    • Winner Winner x 1
  15. #15 CraigA, Jul 20, 2015
    Last edited: Jul 20, 2015
    Josh I would minimise any extra debt by buying your dream bike second hand. Just buy the same model year as the speedy. You will still have warranty and won't take as big a hit as you would if you bought another brand spanker in terms of initial outlay and depreciation.
    I have used this mindset myself recently. I bought a new bike in 2014 which was written off at 13 months old. With the payout I bought a demo with 3000klm on it and only had to outlay a few hundred dollars.
    For me it wasn't about debt as I paid cash for the new bike in 2014. It was just not being able to justify another new purchase so soon. If the written off bike was 5 years old I might have been able to though.
  16. I have gone in to debt for a bike once, a personal loan from the bank, and I had positive equity in the bike and paid the loan out in 2 years.

    Going in to debt for 19k for a bike seems a little silly to me. But I'm a Yorkshireman and refuse to spend $1 when 99c will do.
  17. As noted above, don't go into debt on a liablity. New vehicles are the worst possible liablity.

    If you have a home loan, get ahead on it and then redraw if you must.

    Generally, lower your standards. If you want a different bike, sell yours, reduce your debt and look for something in the second hand market.
  18. Thanks for the replies guys. I'm in a very secure position financially. I pay double our mortgage payments and have a large lump sum in there which we leave alone, we also have a holiday/special needs saving account, so free cash to save for a new bike isn't really there, I have a couple of hundred left over a week to have fun with other bills etc. I wouldn't normally do this and may not as it's a bit crazy and generally don't like the personal loan to be more than 12k. Was really just curious to see how common it is to do this and those that do just pay a lot more than minimum repayments that way the hit isn't as hard to take.
  19. Why would you take on a personal loan at 12% when you can redraw against your loan at 5.5%?

    Same with your special needs account. You are probalby only earning 3% on that. You effectivley earn 5.5% by paying off your loan. You are better off paying down your loan and redrawing when you need it.
    • Agree Agree x 5
    • Like Like x 2
  20. Yeah listen to ibast. You are already paying extra into the mortgage so you have the extra capacity. Draw from the mortgage to get rid of the personal loan and put all of your savings against the mortgage as well.

    Just think of a chunk of what you have against the mortgage as your holiday/special needs amount.