Bike Buyers Tip: be careful of your bike turning ten, the banks don’t like that
Bike Buyers is in the business of purchasing motorcycles which then find themselves on the showroom floor of the famous Fire It Up dealership in Fourways, and the number of motorcycles on the Fire It Up floor suggests they are damn good at what they do. Collectively, they have many decades of bike buying experience and will be sharing their knowledge with The Bike Show Website every Monday offering tips, advice, guidance and warnings regarding your bike buying or selling experience. For this week’s tip, we look into how your bike turning ten years-old affects its value.
The banks have been around for a long time, and they have a tendency to develop policies based on all the experience they have acquired over those years. This is further mitigated by the size they have become, each now hosting head offices bigger than medium-sized villages and having to deal with more transactions than there are people on earth. Because of this, they cannot look into each one forensically and make decisions based on each case. So we have large blanket policies that engulf the country, irrespective of the background.
One of these policies is that they will not finance any motorcycle older than ten years-old. There is some method to this madness, as it is all based on the inherently increasing risk therein. If they finance a motorcycle, they need to know that they can be covered should the loan default, and this is largely down to repossessing the motorcycle to recuperate that unpaid value. And herein lies the rub – will that motorcycle be worth enough when the bank repossesses it?
A new motorcycle is a fairly safe bet, because the chances of it suddenly decreasing in value is very low. A ten year-old motorcycle? Can they be sure? The biggest risk is mechanical fault – if, say, the motor blows up, and chances are high that the owner will not have the cash to rebuilt it, especially as there is unlikely to be any sort of warranty or insurance that will cover that. And so payments on that bike default and the bike is worth only a fraction of what the outstanding amount is.
With this in mind, people with bikes approaching ten years-old need to be wary because that bike will go down a hefty step in demand the moment the decade is exceeded. The reason is that between 60 and 70% of people need finance to purchase a motorcycle, and with that now not an option, you will have only 30 or 40% of the market available when you attempt to sell it. Because of this, dealers will be less likely to make offers and it might sit on the showroom or in the classifieds for a long time before it will be sold. It’s also possible that you might need to lower the price somewhat.
There is another factor bike owners need to keep in mind that could either help or seriously hamper future sales, and that is the discrepancy between model year and registration year. Model year is the year model the manufacturer has assigned it, while registration year is the year it was registered with the local authorities. When the bank evaluates your bike, they look at the registration year, and that can be either good or bad.
Often manufacturers will release a bike before the year it is designated. The most famous for doing this is KTM with their dirt bikes that are usually released six months before the year they are assigned. For example, it is now 2019, but it is very likely that we will see the 2020 models being released in July of this year. It’s a clever ploy, because they and their customers will get a six month jump on everyone else. The problem is that the bank will view these bikes that are purchased in 2019 as 2019 models.
On the other hand, there are importers that have old stock in their warehouse, and will often let them go at bargain prices. This means you can buy buy a new bike that has been sitting in a warehouse for three or more years for an excellent price, and more so the banks will view it as a current model.
The important thing when buying a motorcycle is to find out the model year and the registration year of the bike. The registration papers will tell you the registration year, and that is what the banks will look at while the model year will be denoted in the VIN number. This is important for buying spares, and if you are unsure about the model year then rather give the dealership you are buying the spares from the VIN number and they will be able to tell.