Bike Buyer Guru: the challenges and risks of getting private 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 Bike Buyer Guru column that will be posted every Tuesday. Herewith this week’s column:
Depending on which bank you speak to, arranging finance for a private purchase can be a really difficult process. Some banks will simply not allow the finance of private purchases while others will if the finance is arranged through an authorised broker or dealer. Some banks will allow you to attempt this process yourself under certain conditions.
The reason banks are so strict and cautious about private finance is because the motorcycle you are purchasing and financing ultimately belongs to the bank until paid for. As we all know, if you purchase privately the seller is under no obligation to offer any warranties thereby leaving the customer and the bank unprotected. The bank also needs to know that the motorcycle you (they) are buying is in good condition and exists the way declared and therefore will insist on several conditions to be met before proceeding.
When purchasing a motorcycle privately and arranging finance through an authorised dealer, the dealer/broker accepts a great deal of risk as ultimately the dealer/broker will take responsibility for the motorcycle’s credentials, it’s condition and mechanical integrity. Once you have established which dealer/broker you are going to use, take note of and budget for the following:
- The dealer/broker will insist on performing a roadworthy and an inspection of the motorcycle ensuring that engine and VIN numbers match including the specification of the motorcycle is as per the application and Natis documents.
- The dealer/broker will insist that there is comprehensive warranty purchased to protect you the customer, the bank and the dealer against recourse should you experience a mechanical breakdown. It’s advisable to take the best warranty on offer here especially when buying privately.
- A condition of most warranty providers is that the bike is given a full service to ensure that the motorcycle is up to date service wise, a good time to ensure that the motorcycle is serviced correctly as you have no idea how the previous owner serviced the bike including what oils were used etc.
- The dealer will be forced to perform licensing and registration on behalf of the bank as the bank will want peace of mind that the motorcycle is registered in their name ensuring that there are no outstanding fees or fines.
- The bank may also insist on additional cover such as life cover or short fall cover.
- The normal requirements such as a licence, payslips, bank statements and proof of address are required.
- Comprehensive insurance.
- The dealer/broker will have to settle any outstanding finance on the motorcycle and pay the seller any monies due.
- Some dealers may insist on adding an additional fee/admin fee for facilitating the deal so check with the dealer first so ensure you ask this question first before completing an application.
The total cost of these fees can add up to around R12,000.00 without any admin fee and in my opinion and after hearing more horror stories than you can possibly imagine, it’s important to follow this process carefully and use a reputable dealer/broker. Be wary of a dealer/broker that charges you a R4000 admin fee and then says you don’t need a warranty or any other protection.
As always, ensure that you speak to a qualified finance and insurance specialist who can offer you the correct advice.