News from Oakland Harley-Davidson

Why Finance When I Have Cash?

Posted by Oakland H-D Contributor on Apr 18, 2017 4:00:00 PM

Are you the type of customer that has the cash on hand to pay for a motorcycle? Why finance the purchase of your new Road Glide Special when you can pay for it upfront? Let's look at the question "Why should I finance a depreciating asset?" 

How about an example. Let's say you had $20,000 cash to buy a motorcycle. If you finance that $20,000 motorcycle purchase at 3.99% interest on a 5 year loan, you will spend $22,094 over the course of that 5 year time period. If you had taken that $20,000 in cash and put it in a bank account (don't touch it - that's the key) that earns 2.0% interest at the end of 5 years you would have $22,101. Nearly the same amount right? 00213_17WEB_PHX_161441.jpg

Financing gives you a few other perks:

  1. GAP (Guaranteed Asset Protection) gives you 100% asset coverage. If a bike you paid cash for is stolen you only get what your insurance company gives you. If you have financed your vehicle purchase and added GAP, you will get that plus whatever you still owe. That means they paid out more plus your cash is still liquid
  2. Liquid cash is power. If you need the money it is a lot easier to pull cash out of the bank than it is to try and sell your bike. If you are selling your bike and need it done in a hurry you have less time to find the right buyer willing to give you what it is worth.
  3. No matter how good your credit is it can always get better. Even people with 850 credit scores continue to have multiple open line of credit to keep it strong. We typically use Eaglemark Savings Bank (ESB). ESB is a well-respected bank that reports on all credit bureaus.
  4. If you have poor credit, ESB is a bank that can help you reestablish and rebuild your credit. Cash is king, but there are ways you can finance a bike and pay very little interest while still building the maximum amount of credit. (that’s a story for another time)

Every financial situation is unique. Our goal is to find the financial solution that is right for you. Let's talk about what makes the most sense for you.

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Ready for more information on buying a motorcycle? We've compiled some of our most popular articles into The Definitive Guide to Buying a Motorcycle.

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Topics: Oakland H-D News, Motorcycles, Finance and Insurance

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