Bike Buyer Guru: Should you buy with cash or finance?
Craig Langton has quite the CV. Here at The Bike Show we refer to him as King Midas because, as you might’ve guessed, everything he touches turns to gold. Apart from previous businesses that were massively successful under his watch, he is the owner of Fire It Up in Fourways and within a year of opening its doors it has become the biggest selling motorcycle dealer in the country by a long way. Much of this is down to good honest hard work by him and his team, but much of it also has to do with decades of dealing in motorcycles, spotting trends and noticing nuances. Craig will be passing on much of this knowledge to our esteemed readers in his regular Bike Buyer Guru column. Herewith his next column:
With around 60% of motorcycles financed – the balance which are being purchased cash – when chatting to clients I often discover that the motorcycles purchased cash are purchased with funds that are drawn from their home loan/bond account. The perception might be that it is easier to use the available funds in your home loan/bond account and simply increase the amount by which you repay your home loan right? Maybe not…
In a recent in-house survey it was discovered that most South Africans that withdraw funds from their home loan/bond account never paid extra funds into their account to cater from the cash withdrawal. Consider the following as an example:
- A motorcycle purchased for R100 000.00 and financed with 0 deposit over 72 months @ prime will cost you approx. R135 000.00
- A R100 000.00 withdrawn from your home loan/ bond to purchase the same motorcycle at the same interest rate but over 20 years will cost approx. R236 000.00
My advice to customers is always keep your extra cash reserves in your bond in case of an emergency or for that rainy day. The motorcycle finance application and approval technology we use today makes applying for finance really easy with approval issued in minutes. Motorcycle finance has become quite dynamic recently (depending on the bank, dealer and your profile) with 0 deposit, 72 months to pay, guaranteed buy-backs and guaranteed future values, free service plans. Today you can sign your contract in the comfort of your home on your smart phone or laptop, the banks are making the finance and purchase process easier to the extent that they will even allow you to manage your annual licence fees and traffic fines!
Please note that the above article is intended for educational purposes and not financial advice.