Motorcycle financing guide

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Motorcycle financing guide
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Motorcycle financing guide

Motorcycle financing guide
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If you want to buy a motorcycle, you can choose between cash payment and financing. Many motorcycle manufacturers do not even offer leasing. How are the financing conditions of the manufacturers?

Berit Horenburg

02/24/2014

First of all: cash payers still drive the cheapest, despite low interest rates. But not all motorcycle enthusiasts have the entire purchase price for their dream bike available in cash. For example, if you had to liquidate a relatively high-interest savings deposit in order to raise the purchase price, then it pays to think about whether financing is cheaper. In general, the following applies: Financing serves to promote sales. All manufacturers are interested in this and therefore offer different, partially subsidized financing programs.

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Installment loan or balloon financing

Two types are common: installment loan or balloon financing. With the installment loan, after the down payment, you pay constant monthly installments over the term. After that, the motorcycle is yours. With this type of financing, however, the monthly installments are higher than with the balloon loan. An example: the BMW R 1200 GS costs 14,400 euros. With a deposit of 3183.29 euros, you pay monthly installments of 350 euros. The net loan amount is 11,216.71 euros. After three years in which you have paid 15,783.29 euros, including interest and down payment, you will own the motorcycle. The effective interest rate at BMW is 7.99 percent. MOTORRAD surveyed the ten manufacturers who sell the most motorcycles in Germany. When it comes to installment loans, almost all other manufacturers offer better interest rates.

With the balloon loan, the down payment is followed by comparatively low monthly installments, but what remains is a high final installment. For the BMW R 1200 GS, BMW has calculated it like this: For example, you pay 4849.78 euros of the purchase price of 14,400 euros, i.e. about a third. This leaves a net loan amount of 9550.22 euros and a total loan amount with interest of 10 192 euros. Then you stutter a monthly installment of 170 euros. After 33 months, the final installment is still 4752 euros, which is around a third of the purchase price. Here the effective annual interest rate is only 3.3 percent. Pretty clear which offer BMW favors. Those who choose the “3asy Ride” balloon loan can return their motorcycle after 33 months or have a new BMW financed.

Almost all manufacturers have such three-way financing, which includes returning the vehicle, paying the final installment or refinancing, in their program. Advantage for the customer: ride the latest motorcycle every three years if he chooses this variant. Advantage for the manufacturer: customer loyalty and sales promotion.

Best conditions often for motorcycles from the previous year

The better the conditions, the greater the interest in sales: the Piaggio Group is currently offering 0.0 percent financing for the Moto Guzzi and Aprilia brands, among others. The best conditions are often also available for motorcycles from the previous year. For example, Kawasaki offers financing for many new 2013 models at a discount of ten percent on the purchase price. There is also a discount code game where you can get another ten percent out (www.kawasaki.info/rabattcode). Time and again, manufacturers also offer 0.0 percent financing for individual bikes. But mostly from those who don’t go away like hot cakes. If this includes your dream motorcycle and you are currently getting 0.5 percent interest on your money in the bank, it is worth considering.

Ducati offers payment protection insurance that is linked to credit

A specialty among the manufacturers surveyed is Ducati, which has been part of the VW Group since 2012. Volkswagen Financial Services, which started its business in 1949, has 12,000 employees, most of whom work in the automotive sector. “As the group expands, we expand our business area. We grow with it, ”says Stefan Voges-Staude, press spokesman for Volkswagen Financial Services. Ducati is the only one of the brands surveyed to offer residual debt insurance that is linked to the credit. The effective annual interest rate is 3.99 percent for the 2014 models. A residual debt insurance covers the loss of incapacity for work due to illness or accident. The costs only have to be included in the effective annual interest rate if the lender stipulates residual debt insurance. For all other brands, residual debt insurance is optional and generally increases the total cost of borrowing.

Most manufacturers do not specify an annual mileage. Because the aim of financing is to acquire the vehicle. Exceptions: Ducati assumes an annual performance of 5,000 kilometers, with KTM it is a maximum of 10,000 kilometers. All other manufacturers do not make any specifications.

In the event of returns, disputes are not excluded

However, many contracts include the option of returning the vehicle. However, this repurchase agreement is recorded between the customer and the dealer. Honda dealers, for example, also set the final installment with three-option financing based on the combination of contract duration and mileage. That’s logic. Because a motorcycle that has traveled the world will look different than one that takes asphalt under its wheels at the weekend. When returning the bike, however, disputes about the condition of the bike cannot be ruled out.

Apparently it is more the younger bikers up to the age of 40 who don’t pay for their motorcycle in cash. “This group of buyers has a higher affinity for financing motorcycle purchases. However, we cannot derive any generally applicable trends from this, ”says Bernd Kohler, Country Operations Manager at Harley-Davidson Financial Services.

If you are considering financing a motorcycle, you can also go to your house bank to inquire about the terms and conditions. Because then he appears to the dealer as a cash payer and can still trade the purchase price.

Example of balloon funding

Ducati Monster 1200 S.

Special feature at Ducati: A residual debt insurance is included in the financing with 3.99 percent APR

Total monthly rate: EUR 149.00 including credit protection letter

Premises: Price € 16,295.00, down payment € 3,259.00, net loan amount € 13,762.48, borrowing rate (tied) 3.92% p. a., effective annual interest rate 3.99% p. a., duration 48 months, mileage 5000 km / year, final installment € 8364.57, total loan amount € 15,516.57, total installment € 149.00.

Example of an installment loan

BMW R 1200 GS

Special feature at BMW: The installment loan has a significantly higher effective annual interest rate of 7.99 percent than other BMW offers

Monthly rate: 350.00 euros

Premises: Product BMW basic financing, vehicle price € 14,400.00, down payment € 3,183.29, net loan amount € 11,216.71, borrowing rate p. a. * 7.71%, total loan amount € 12,600.00, term 36 months, effective annual interest rate * 7.99%.

* bound for the entire contract period

Example of balloon funding

Kawasaki ER-6n ABS

Kawasaki balloon loan: low monthly rate, short term, annual percentage rate of 3.99 percent. That leaves the final installment.

first installment: € 60.97

46 current installments: 88.00 euros

Final installment 2098.50 €

Premises:Price * € 6,995.00, down payment € 1,399.00, net loan amount € 5596.00, processing fee € 195.86, fixed borrowing rate p. a. 2.612%, total loan amount € 6207.47, term 48 months, creditworthiness assuming, effective annual interest rate 3.99%.

* plus Extra costs. Financing example from Kawasaki Finance

Interview: Marcus Kando

Marcus Kando, Head of Sales Germany at Ducati Financial Services, on the financing offer.

Ducati has been part of the VW Group since 2012. What does Ducati Financial Services offer?

Ducati Financial Services has existed since July 1, 2013. There are currently 22 employees in the field who work in the motorcycle sector. In Germany, we offer financing and insurance exclusively through Ducati dealers. For end customers we have the classic loan with installment payment or three-way financing. Three-way finance is the bread-and-butter business. After 36 months, for example, you can return the motorcycle, redeem the loan or continue it. Few of them replace, most return the vehicle and order a new one.

There is a trend towards financing?

Our mission is to promote sales for the manufacturer. In Germany around 75 percent of cars are financed or leased. For motorcycles, we assume 20 to 30 percent. Our ambitious goal here is also 50 percent. We want to address people who have not yet bought. Also because a new motorcycle seemed too expensive to them. Financing is becoming more and more conscious, the trend is going there. In the past, the customer went to the house bank, now more to the dealer. It’s a change in mentality. In contrast, leasing plays a negligible role for motorcycles. There are driving schools that lease.

Do you have special offers?

We also offer fully comprehensive insurance for motorcycles. And also a loan guarantee for the financing.

Which motorcycles are being financed?

All types of motorcycles are financed, but the rate for the entry-level models is higher than for the superbikes. The average car financier is between 25 and 45 years old. We assume the same pattern for motorcyclists.

Financial conditions of the manufacturer

Aprilia

For the brands Piaggio, Gilera, Aprilia, Moto Guzzi, Derbi and Scarabeo Piaggio Deutschland offers the following financing programs: 0% financing with a term of 12, 24 and 36 months (LZ). For the Vespa brand 0% with 12 months of service life The following interest rates (effective) apply to the standard programs, which also include longer terms: 0.9% for 12 months, 1.9% for 24 months, 2.9% for 36 months, 3.9% for 48 months Months LT, 4.9% at 60 months LT. Optional: residual debt insurance. In addition, the accessories for all Piaggio brands can be co-financed for all programs up to a total value of 2000 euros and / or the driver’s license can be refinanced on presentation of the driving school invoice in combination with a new vehicle financing. Piaggio does not offer leasing.

Bank: Creditplus Bank AG

Financing rate: no Information

Trend: stable

BMW

BMW Financial Services offers products related to leasing, financing, insurance and asset management. Special offers: BMW Financial Services offers the product for all new and demonstration motorcycles from BMW Motorrad 3asy ride. The special thing about this product: Customers only have to remember the number three. 3.3% APR, 33 months term, 33% down payment, 33% final installment, three options at the end of the contract: return of the vehicle, follow-up financing, takeover of the machine by paying the final installment. Optional: residual debt insurance.

Bank: BMW Bank

Financing rate: For reasons of competition, BMW does not provide any further information on this

Trend: stable relationship between financing and cash purchase

Ducati

Desmo Classic Credit, the classic installment loan from Ducati Financial Services with constant monthly installments and a term of up to 72 months. Desmo Plus credit with variable down payment and a term of up to 54 months, term-dependent final installment with the following options at the end of the contract: return to the dealer, further financing, payment of the final installment. IndividualCredit with terms of 12 to 54 months. At the end of the term: continued financing or payment of the final installment. The effective annual interest rate is 3.99% for the current models including residual debt insurance. Without residual debt insurance, the effective annual interest rate for current models is 4.99%.

Bank: Ducati Bank

Financing rate: around 20 percent

Trend: open

Harley-Davidson

Harley Own is a loan product with constant monthly installments and a final balloon installment. At the end of the contract period, three alternatives: payment of the final installment, follow-up financing or return of the motorcycle to the dealer for trade-in when buying or financing a new motorcycle. Harley Loan is the classic installment loan for the purchase of a new or used Harley with constant monthly installments over terms of 12 to 96 months. Harley Bikes finances bikes from an effective interest rate of 4.99 percent. Optional: residual debt insurance. In addition to the motorcycle, accessories, clothing and a follow-up or used guarantee can also be financed.

Bank: Santander Consumer Bank AG

Financing rate: around a quarter of the new vehicles sold in Germany in 2013

Trend: stable

Honda

Installment financing: Constant installments with terms (LT) of 12 to 72 months, effective interest depending on the LT from 1.99% to 3.99%; Balloon financing: monthly installments and a final installment with LT from 12 to 60 months, depending on the LT from 1.99% to 4.99% effective interest; Three options financing: monthly installments and a final installment with LT from 12 to 48 months, depending on the LT from 1.99% to 4.99% effective interest. At the end of the contract period, three options: payment of the final installment, continued financing of the balance or return of the vehicle based on the repurchase agreement; 50/50 financing: 50% down payment, followed by 12 or 24 months without installments, effective interest rate 0.00%. At the end of the contract period, three options: payment of the final installment, continued financing of the balance or return of the vehicle based on the repurchase agreement.

Bank: Group-owned financing company Honda Bank GmbH. Special offers: For the V4 models (VFR 1200 F, Crosstourer, VFR 800 F, Pan European) classic installment financing with an effective interest rate of 2.99%. The LZ: 12 to 72 months.

Financing rate: Every third vehicle sold is financed through the Honda Bank.

Trend: A dependency on the selected model can be determined here. In the case of scooters or light motorcycles, the share of financing is currently somewhat lower. Due to the attractive entry-level prices of these models, the purchase price is more often paid directly. In the case of motorcycles, there is an upward trend in financing.

Kawasaki

In addition to the standard financing, which includes an effective annual interest rate of 1.99% to 4.49% for 12 to 60 months with constant monthly rates, there is this Easy2Bike program (E2B), a three-way financing. With E2B the terms are 24, 36 or 48 months, the effective annual interest increases from 2.49 to 3.99%. After this, the customer can redeem the motorcycle, continue to finance the final installment or return the vehicle. There is also a warranty extension from two years to four years. Kawasaki recommends a 20 percent down payment for both variants. Optional: residual debt insurance.

Bank: Kawasaki Finance powerd by Santander Consumer Bank. Special offers: 2013 models are offered with a 10% discount.

Financing rate: 33%

Trend: rather declining

KTM

Conditions: with KTM Credit Light, budget financing, the customer can drive the latest KTM over and over again with a calculated residual value and a term of up to 60 months. The standard financing KTM Credit enables repayment in constant monthly installments for a term of up to 96 months. The interest rates (effective annual interest rates) are variable and are currently between 4.99% and 6.99%. With funding from Autoflex the customer receives terms of up to 84 months; Rate changes or replacement at any time and free of charge. Optional: residual debt insurance, mileage 10,000 kilometers.

Bank: KTM works with Santander Consumer Bank AG under the name KTM_FiNANCE. Special offers: no.

Financing rate: Approx. 30% of the new KTM vehicles are financed / leased.

Not a clear one trend recognizable.

Suzuki

Financing from 1.99% for all models: All participating Suzuki dealers can finance street legal new vehicles, vehicles with daily registration as well as demonstration and rental vehicles with or without down payment and terms of 12 to 60 months. The interest rate depends on the respective term and rises from 1.99% to 4.99% (1.99% for 12 months, 2.99% for 24 months, 3.99% for 36 months, 4.49% at 48 months long, 4.99% at 60 months long). Optional: residual debt insurance.

Bank: SUZUKI FINANCE in cooperation with Creditplus Bank AG. Special offers: no. Suzuki does not offer leasing in the motorcycle sector.

Financing rate: The new vehicle financing rate is around 30 percent.

Trend: currently not recognizable.

triumph

Conditions: Street Triple and Street Triple R: 3.99% APR (Duration 36 months). All other models: 4.99% APR (term 12 to 72 months).

Bank: Credit Plus. Special offers: no. Optional: residual debt insurance.

Financing rate: The financing rate is around 15%.

Trend: At Triumph, the cash purchases are traditionally considerably stronger than the financing. Nothing about that has changed in recent years.

Yamaha

Two programs: linear financing in which the customer pays a constant installment over the entire term (first installment can be different). At the end of the financing period, the vehicle has been paid for in full. Budget funding: The customer pays a consistently lower rate over the entire term (first rate may differ). At the end of the financing period, the customer still has a certain amount outstanding. This amount can be redeemed or further financed. The dealer may also buy the vehicle again. The following applies to both financing models: The effective annual interest of 1.99% to 5.99% depends on the term and down payment. The customer has the option of securing his loan installments or the value retention of the vehicle in the event of loss through additional options.

Bank: Yamaha Motor Financial Services, a service center of Santander Consumer Bank AG. Special offers: see www.yamaha-motor.de.

Financing rate: not insignificant.

Law and advice

What you should consider when financing a motorcycle

Financing a vehicle is aimed at acquiring ownership. In the case of leasing, which, however, plays a minor role in the motorcycle sector, only one use of the motorcycle – similar to rental – is sought. Even if you buy a motorcycle through financing, you usually do not initially become the owner of the motorcycle. The financing bank will retain the vehicle registration document to secure its claims and will have ownership of the vehicle transferred to it. The buyer of the motorcycle only has a right to use the motorcycle; ownership is only transferred to the buyer once the financing installments have been paid in full.

In the event of defects in the motorcycle, the warranty rights, i.e. supplementary performance, reduction in price and compensation, can be asserted against the seller under the conditions of §§ 434 ff. BGB. However, this initially has no effect on the loan agreement concluded with the financing bank; the loan installments must continue to be paid. The obligation to pay the loan installments does not apply until the contract is reversed as part of a withdrawal due to material defects.

When financing the motorcycle via a consumer loan agreement, the buyer of the motorcycle has a fourteen-day right of withdrawal if the loan agreement is used exclusively to finance the motorcycle and the contracts are linked to one another. In this case, there is the possibility of reconsidering the purchase and, in case of doubt, canceling the loan agreement.

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