It is likely if you are in the market to purchase a new motorcycle; your number one concern is probably going to be negotiating the front end price of your new motorcycle purchase. As a result, you will shop a few motorcycle dealers and look for the dealer that will provide you the best front end price. However, the front end price of your motorcycle purchase is only a fraction of what you should be concerned with.
To understand this concept you must dig into the motorcycle purchase process much deeper than the front end price you will pay for your bike. You must look at purchasing a motorcycle from a motorcycle dealer’s perspective. See all motorcycle dealers have one thing in common which is they are in business to make a profit. No matter what, a dealer has to make a profit or it has no incentive to sell you a motorcycle. It is your goal as a consumer to make this profit for a dealer the least possible and it is the dealer’s goal to maximize their profit while making you feel you got a good deal.
This is a very basic concept, but it is exactly the place in the motorcycle buying process where most motorcycle buyers make the biggest mistake. See most motorcycle buyers focus very heavily on finding the dealer that offers the best front end price, but these are many times the same dealers that make a ton of money on the buyer with backend products such as motorcycle loans, motorcycle extended protection, freight and prep, Gap insurance, pre-paid maintenance and many more products.
So if you want to ensure you are getting the best deal on your motorcycle purchase you must educate yourself on each of the following areas:
Motorcycle Loans
In their most basic form motorcycle loans is just a way to purchase a motorcycle with debt. Typically motorcycle loans come in two forms: installment loans or private label credit card loans.
The important thing for you to understand is that dealers have the ability to make money on either type of loan. This happens when a dealer sells you a loan program that will make the bank more money in which case the dealer is provided a kick back from the bank. These loan programs that offer kick back to the dealer are typically not the best motorcycle loan programs for you! As a result, if you are planning on getting a dealer motorcycle loan you need to have competitive motorcycle loan quotes before you step foot in a dealership. This will provide you a benchmark to help you ensure you do not get push into a loan program that is making the dealer tons of kick back money at your expense.
It is important you have a clear understanding of the terms on the motorcycle loan so you can make an accurate comparison of the loan the dealer is offering versus other motorcycle lenders. You should understand such things as the interest rate, the term of the loan, late payment fees, what happens if you miss a payment, is the interest rate variable at any point in the loan, and if your bike will be totally paid off at the end of the loan term.
A full explanation of motorcycle loans in beyond the scope of this article, but you can find a ton of information as well as get online motorcycle loan quote comparisons in the resources at the end of this article.
Motorcycle Extended Warranty
A motorcycle extended warranty is a way for you to extend the manufacturer warranty to provide you piece of mind. While typically this is a good idea for buyers, it can be a huge profit center for a dealer. Please be warned that before you make your motorcycle purchase do your research on extended warranties while you are shopping dealers. When a dealer quotes you a price on a bike make sure you ask them how much extra it would be for an extended warranty. What you will find is a big variance in prices from dealer to dealer for the same extended warranty. For instance, one dealer may quote you $6000 for the price of the bike and $1000 for an extended warranty while another dealer quotes $6200 for the price of the bike and $500 for the extended warranty. Which one are you going to buy?
Make sure you also ask for the details so you are comparing apples to apples. For instance, some extended warranties cover only 24 months and others cover 48 months. Obviously the 48 month coverage will cost more than 24 months, but you should not be paying substantially more from one dealer to another for the same length of coverage.
One more note, some dealer may be unwilling to negotiate you a price on extended warranty up front. If this happens this is probably not a good sign that you want to do business with that dealer. If it smells bad, it probably is bad!
Freight And Prep
Freight and prep is pretty self explanatory, but you should understand how the dealer charges you for it. When you are getting your quotes make sure you ask if the quote includes freight and prep and how much of the quote is freight and prep. Some dealer charge as much as $1000 – $2000 for freight and prep on top of the bike price that was quoted. When this extra charge is put into your motorcycle loan it is hardly visible because it only affects your payment by $10-$15 on a standard 60 month loan. Again with freight and prep, if the dealer is unwilling to tell you actual figures than it is probably not a dealer you want to do business with.
GAP Insurance
Gap insurance can be a good idea for some motorcycle loans. Basically, Gap insurance will cover the difference in your loan value and the value of your motorcycle if you have a total loss on your bike. So think of it this way. If your bike is worth $6000 used but your loan has an $8000 balance you have a GAP of $2000 when your motorcycle insurance pays off your bike for a total loss. As a result, if you do not have Gap Insurance you will still owe the bank $2000 to pay off your loan.
When you are shopping for your bike it is a good time to ask the dealer how much the dealer charges for GAP insurance. This way you know upfront if you purchase from the dealer what to expect.
Pre-Paid Maintenance
Prepaid maintenance is typically a contract between you and the motorcycle dealer which you pay up front for basic maintenance on your motorcycle and also get some benefits if you have any big maintenance problems. When buying prepaid maintenance it is critical you fully understand what is covered and what it not and compare this to your warranty coverage. Also, understand the terms of the contract thoroughly.
For instance, what happens if you move? Can the maintenance contract be used at other dealers? How long is it good for? How much does it cost compared to other dealers? What is the actual cost of the maintenance if you paid for it outright when it was required? These are just the basics on prepaid maintenance for more thorough discussion check out the resource articles below.
Overall, educating yourself in all of the above areas will help make your motorcycle buying experience a success and ensure you do not get taken to the cleaners by a bad dealer.
Reference:
- Common Mistakes Motorcycle Buyers Make When Looking For a Motorcycle Loan – A comprehensive look at the most common mistakes that motorcycle buyers make over and over again when shopping for a motorcycle loan. Prepaid Maintenance What You Need To Know – This article takes a look at prepaid maintenance in detail and provides you questions you should ask before getting prepaid maintenance. Watch Out, The Depreciation On Your Motorcycle Can Affect Your Motorcycle Loan – This article provides some facts about motorcycle loans that you should highly consider before getting a loan. ; The idea is to show you how depreciation on your motorcycle can affect your motorcycle loan and put you in a negative financial position. ; Understanding GAP Insurance – Provides a detail overview of GAP Insurance. E-Loan – A provider of online motorcycle loans Capital One – A financial service organization that provides a variety of loans including auto and motorcycle loans. Cycle Trader – Allows you to search thousands of motorcycle ads by make, model, location, and more. Motorcycle Loan Definition – Motorcycle loan information from from Wikipedia, the free encyclopedia.
