Episode 67 – Don’t Overpay on Your Next Motorcycle

Today’s episode is all about your next bike.

Purchasing Options:

First let’s discuss actually locating your next bike. Now that the world can actually spell pandemic, and with so many retail outlets closing their doors to the public, buying a new or at least new to you motorcycle can be quite tough. Sure, our local Harley dealers are making it easier to purchase by offering curbside service, private demos, and even coming to the customer with a bike, but how do we know we are getting the best deal? Do you live in an area that allows for near year-round riding? If you do consider yourself lucky! Prices for motorcycles in locations where riding can happen most of the year are usually cheaper than those in areas where the riding season is much shorter. So how do you find a bike that isn’t local? Websites and Apps, of course! Cycle Trader, RumbleOn, etc. all provide great ways to buy a bike. Many dealerships use these platforms to sell bikes, so why not let a search tool do the heavy lifting for you?

 

I won’t buy a bike I can’t ride first!

How can you trust the person you are buying from?

How do I get the bike to me if I buy from out of town?

 

These question and statement are things to consider.

 

Buying a used bike online can be scary, but think about this: If you are buying from a dealership, they will typically throw some sort of warranty on the bike, and they don’t want to chance ruining their reputation by selling a lemon to you. If you are buying from a person, I suggest you arrange a video call with the person, and have them walk around the bike with the camera so you can see it. This will only show you that the bike looks clean, but how do you know it works? Ask them to start it, rev it, flash the lights, honk the horn. But also, look at the area around the person in the video. If they take care of their home, garage, etc., chances are, they take care of their bikes. 

 

Roadblock: I personally will not buy a bike on Craigslist or eBay unless I am able to go out and see the bike in person.

 

Companies like RumbleOn provides a warranty of 90 days, which should be plenty of time for you to check it out, ride it, etc. to make sure everything works.

 

Getting the bike to you is another great area of concern for people. There are many ways you can get a bike from a distant location to your place. You can go pick it up yourself if you have a vehicle with a tow hitch or if you have a truck. If you don’t have either of these, ask a friend. If you are a rider, chances are you have some riding buddies, and there is a high likelihood one of them has a truck or a car with a towing capability. Finally, if all of these options aren’t available to you, you can pay to have it shipped.  I have had motorcycles shipped a few times, and the price isn’t too bad. I haven’t had to pay more than $800 for any bike I have ever shipped. Now, if you have to ship the bike, this will offset the money you are saving, so you will need to take that into consideration.

 

Paying for the bike:

So, you found the perfect bike, and now you want to buy it, what do you do? These tips apply to any purchase you are considering, in town or out of town, for a vehicle. Most of us will have to finance our motorcycle purchase, which is fine, but make sure you are aware of how a dealership makes money. Yes, I am picking on dealerships here, because they are the ones that are most guilty of this. A dealer makes money from you in 2 ways when you buy a bike. The first way is simply the sell of the bike to you. They paid 1 price, and you bought it for another, almost always higher than what the dealer paid for it. The 2nd way is when you finance through them. You see, dealerships want you to buy the motorcycle right then, so they remove as many possible “distractions” to you leaving the store without the bike as they can, which includes financing the bike for you. Now, when you go in to speak with the finance and insurance person, they should have already found the right Buy Rate for your loan. What do I mean by Buy Rate? When a bank extends credit to you, they are buying your debt for a percentage rate, or as we all know it, interest. Now, if there is a buy rate, there is also a sell rate. The sell rate is the interest rate you accepted and signed the contract for. Shouldn’t this just be “The Rate?” Nope! A dealership has the ability to sell you a loan for more than the bank is offering as a way of earning a commission. Here is a scenario:

A young woman is buying her first new motorcycle, and she is financing it through the dealership. She is fresh out of college, and has not built her credit up just yet. She knows that the interest rate is going to be higher because of her credit score, and she has accepted that. She picks out the bike, the price is what she was looking to pay, so she heads in to speak with the F&I dude. He runs her credit through his finance system, 3 banks came back with pretty similar rates, 7% for up to 84 months. While he is talking to her, he learns that she is expecting a high interest rate, so he tells her that the banks came back with a 10% rate for 60 months. When our buyer says that is too much, he makes it look like he is actually doing something, in reality he is looking at facebook. He tells her the loan officer said they could do 9.5% at 84 months. The payment looks so much lower and it is actually lower than our buyer’s budget, so she signs for it.

 

Some math:

Let’s say she is buying a new Softail, the final sell price after tax, title, and registration is $20,000

The bank’s buy rate of 7% would have made the payment $396/month for 60 months... This would have cost our buyer $3,761 in interest.

Our buyer signed the contract at 9.5% for 84 months. Payment is only $327/month. This will cost our buyer $7,458 in interest.  This gives the dealership a commission of $3,697 from the bank.

 

How to combat this:  To ensure you aren’t paying $3,700 more than you should, consider getting pre-approved for your financing.  I prefer to shop all my favorite financial institutions as well as banks/credit unions in my local area. For Harley-Davidson purchases, I contact HDFS directly and get my terms and everything figured out before I even go to the dealership. Here is my checklist for purchasing any vehicle:

 

  1. Check my credit score:  I have about 3 decades worth of free credit monitoring due to the VA, Target, TJ Max, and Sony data breaches. With the monitoring service I use, I am able to pull my credit report and score anytime I want. So know what your score is.  If you are below 650, prepare for higher interest rates, and you for sure should shop around for financing. If you are over 800, no F&I person will attempt to raise your rate for a commission.
  2. Figure out my budget:  I have to know how much I can afford, how much I am willing to afford, etc. Knowing my budget simply allows me to narrow my search to what I can afford.
  3. Locate the bike: I like to do research, so this part is fun for me. Now, as you all know, I have only bought new Harleys, not trying to flex, just my personal preference. I have helped friends find and shop for used bikes, and honestly, it is a lot harder to research used bikes than new bikes. 

For used bikes, here is what I research: 

  1. Recalls for that model, I want to make sure I ask if the recall has been fixed or if I will need to get it done after I purchase the bike 
  2. VIN check (think Carfax but for Motorcycles) This is not sponsored by these folks, but check out cyclevin.com as an option. This is a fee based tool, so I would only use it for the bike I have decided to go with.
  3. I want to know what the aftermarket has available for the bike. As do most bikers, I too like to customize my bikes, so I want to make sure I can actually do what I would like to do.
  4. What do owners actually think of their bike? Forums and social media groups are great tools for finding out what people really think about their bikes. Now, some people bitch and complain for the sake of talking, so you have to take what you read with a grain of a salt. For me, what I look for is consistency.
  5. Negotiate: After I find the bike,  finish my research, it is time to haggle. Yes, I ALWAYS haggle when I am buying a vehicle. I live for the negotiation. I have zero shame for asking for things for free. I have never paid MSRP for any motorcycle, and I never will. You shouldn’t either. I don’t care what Harley, Honda, Indian, etc. suggests a motorcycle should cost, I care about what I am willing to pay. The worst thing someone can say is no, but if you never ask, the answer will always be no. I have a custom/trademark when buying bikes, and yes, my dealers all know what it is, free coffee mug and free hat. It doesn’t sound like much, but it is the icing on the cake for me.
  6. Keep your mouth shut about your finances, payment capabilities, etc. Do not give a dealership the intelligence they need to charge you more money. This is another reason why I truly prefer getting a loan myself. 
  7. Post an image on IG of my new bike



In conclusion, do you homework, understand how dealers make money, understand your own financials, and always have more information than the dealer.

 

Closing Argument: What is the dirtiest deal you caught a dealer trying?