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"Motorcycle" means a motor vehicle that has a seat or a saddle for the use of the rider and is designed to travel with not more than 3 wheels in ground contact. "Motorcycle" does not include a motorized bicycle or tricycle, a tractor or a parking control vehicle. [1993, c. 683, Pt. A, §2 (new); Pt. B, §5 (aff).]
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Motorcycle Parts - OEM or Aftermarket ? By Daniel Levy This is always a difficult one to answer when shopping for motorcycle parts and I firmly believe that each one of us must decide what's best for our bikes AFTER carefully evaluating each of the Read more...
Motorcycle Helmets - Mind Your Head! By Daniel Levy To most riders, motorcycle helmets do not fit into their dream accessory. They feel helmets are restrictive and unnecessary and do not add to their aesthetic appeal. But it is important to know why Read more...
Motorcycle Parts - OEM or Aftermarket ? By Daniel Levy This is always a difficult one to answer when shopping for motorcycle parts and I firmly believe that each one of us must decide what's best for our bikes AFTER carefully evaluating each of the Read more...
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motorcycle helmet bag Article
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Welcome To The World Of “Upside Down” Motorcycle Loans! By Jay Fran With the depreciation on motorcycles being so enormous after they are driven off the showroom floor, the potential for a buyer owing more on their loan than the bike is worth it quite high. Owing more on your bike than it is worth is often referred to as the world of “up side down”.
Many people finding themselves in this situation discover that financial lessons are sometimes the hardest and most expensive to learn. Motorcycle loans of more than 48 months (especially without a down payment) put you in the position of owing more than the value of the bike.
Let’s take a look at this phenomenon.
First, the interest calculation your lender uses can make a big difference in your situation, especially in the first 18 months. There are two primary interest calculations, pre-computed (combined with rule of 78) and simple interest.
Pre-computed interest combined with Rule of 78, is typically the worst situation for a buyer because most of the interest is paid in the first 24 months. Therefore, in the first 24 months little of the monthly payment has gone towards paying down principal. If a buyer wishes to sell or trade in the within this timeframe they will likely find themselves owing more
than the bike is worth. Statistics show that the average owner trades in every 18-24 months.
Simple interest on the other hand, is much more favorable for buyers since interest accrues on the balance of the loan. However, buyers that extend their loans for greater than 48 months can still find themselves up side down with simple interest. This is especially true if a down payment is not made. The reason this occurs is that the depreciates faster than the principal is paid; leaving the balance owed to the lender to be more than the bike can be sold for.
A common view that many people have is that they will just surrender their to the lender if they are caught in an “up side down” position. If you are considering this option don’t! Your worries do not just end after your bike is surrendered or repossessed; in fact they are just beginning. The lender will sell your bike at an auction for much less than it is worth. You will still owe the difference between the amount you owed on your loan and the amount the sold for at auction. So if you owe $5000 and the bike sells for $1500, you still are responsible for owing the lender $3500. To make it worse lenders may tack on hefty auction fees which you will owe as well. So the net result is that you are now responsible for making monthly payments on a bike you can no longer ride.
So what steps can you take to prevent from being caught “up side down”?
1. Find a lender that uses simple interest. Avoid lenders that use pre-computed / Rule of 78 interest calculations.
2. Always try to put money down on your purchase.
3. Try to avoid loans that extend past 36 months. Jay Fran is a author and publisher for a website that specializes in Motorcycle Loans: High Risk OK. A comprehensive resource on simple interest motorcycle financing, poor credit, new, used and bad credit motorcycle loans.
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Shopping for your Motorcycle Parts Online with less effort By Karen Nodalo If you are among those who spend most of your day attending to your motorcycles, indeed you are considered to be called a motorcycle enthusiast. These people would exchange their important Read more...
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Motorcycle Tires - Why Should You Care? By Daniel Levy One of the most important parts of any vehicle is its tires. Not only are the tires subject to a large amount of wear and tear, but also their durability depends largely upon how you maintain them. Read more...
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