Two wheels are no different to four wheels when it comes to borrowing money for that extravagant purchase, but always be aware of the possible quick thinking finance dealers, because they could see you coming.
Why? Because Motorcycles have been known as being an unnecessary commodity, which is short means that if you want to borrow money for a motorcycle purchase, then they know how much you want a bike, and not if you need it, kapish?
Its called: Needs ‘v’ Desires
Some loan companies will spot the need and desire purchase from a mile away, based on what it is you want to borrow the money for. So the only way to avoid the “Shark” is to sometimes consider the personal loan facilities at your bank, building society or online lending brokers.
But hold on just one minute, and let me ask you a question – OK?
Q. Why are dealers called dealers?
A. Do I need to answer that one?
Bike Dealers come from the same womb as a car dealer, they all want to prove they have the best deal available, they will talk you into a deal, and you can reciprocate by talking them into a deal. So, before you go and borrow the funds, take a minute to think about the next statement.
Dealer Finance – Motorcycle Finance In-House
A fair majority of dealers are tied in with a major lending company due to something called stocking policies. This is where they borrow money from the finance company to buy stock for their showrooms and forecourts. This is normal, and about 80% (estimation) of Motorcycle Dealers use this type of funding.
Now, the one tie into them borrowing money from a finance house, is that the finance house become first line of attack for a dealer selling a bike on the knock. They agree with the dealer principle a base rate of funding to sell to you, the buyer, based on the age of the machine you are buying.
And, no matter what that base rate is, the dealer will make a small % of profit from the agreement, from the finance company. For example, if they offer the dealer a “buy at” rate of 3%, and the dealer sells it to you at a “sell at” rate of 5% – they make 2% per year of the duration.
This may not sound a lot, but think about the volume!
Use The Dealer Facilities To Close Your Purchase
We all know that we can borrow money online, or from banks for around 5% flat rate, so why not offer the dealer an incentive to do you a deal based on you taking finance with them? And no, don’t use it as a first line of attack, go right to the end and get up to leave the showroom then…. “BANG” – hit them with a closing thought.
It comes down to a scenario of “If you can do this, I will do this” – and if you find a dealer who wont play the game, I’ll eat my shorts!! (not a pretty sight, assured)
Here is what I would do, if the boots were going on my feet.
- Try and tighten the deal right down whilst keeping “finance” away from the conversation – and if they ask you, you have already finance in place. A good dealer will try and use that right from the word go, and deal you into a finance package.
- Once you have extracted the best and the dealer will go no more, go in for the kill and hit him with this: “Are you prepared to let me walk for the sake of £200?” Monitor the reaction and then go for the throat….. “If I take your finance at 5% flat, would you go that extra £200 on the deal?” Great close, and if they say NO – just walk away and go to the next dealer on the phone or visit.
- Once you have spoken to another dealer, if you can get a provisional agreement from them, then call your preferred dealer back and give him one more try. This could get you the £200 extra, and also goo knowledge that when it comes to change your bike, you know you can drain every last drip out based on experience.
Just treat them like they are a rag doll or a toy, and don;t let go until you have what you want – you are the customer, and you want to be treated like they want your money.
Dealer Volume Bonus
Reasoning: The reason I say that dealers will go that extra mile based on you taking their finance, is because they want the volume of lending for their year end. The finance company pay them a volume bonus over and above the deal set right from minute one. This can mean anything from £10,000 to £100,000.00 extra for the dealer, based on how much vlume they pump through the finance company.
If they have a target of say £1,000,000.00 per year on finance, they will probably get between .75 and .85 or 1% volume bonus – which calculates at just short of £10K bonus. Yet, £1million is pretty low for a main franchised dealer, because some of them can hit between 3-5 million without a blink.
So, they not only want to sell you the bike, they also want the finance to get the volume bonus at the end of the year. Just make sure they know, that you know the score!
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