Bike Buyers Tip: Whatever you do, don’t buy a bike based on instalments
Bike Buyers is in the business of purchasing motorcycles which 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 buying a motorcycle based only on the instalments is a terrible idea.
It happens quite a bit – someone looks at a potential motorcycle for sale, both new and used, and the question asked of the salesperson is “what are the monthly instalments?” The salesperson, sharp as a whistle, immediately says, for example, “R2000 per month”. The potential buyer does some fast mental arithmetic plus some high-speed budgeting and concludes that R2000 a month is very affordable.
Boom! And the deal is signed.
The rider spends the month blasting around, enjoy the new steed, until the end of the month comes along, and the debit orders are sent off – R2000 for the instalment and R800 for insurance. Okay, R2800 isn’t too bad, and so we carry on. Petrol is naturally spent, removing funds, and then comes the first service – a good R3000 maybe? Okay, this is starting to get expensive, and it’s only just beginning.
Some months later, the rear tyre is getting smooth, and the chain is starting to show kinks. That’s another R2500 for the tyre and R600 for the chain. And another service. And then the new rear gets a puncture, and you need another one, and the brake pads are starting to look thin. Now it’s a bit beyond your funding, so you have to park it for some time to save.
Move on another two years, the interest rates have increased, and you’re now paying more than R3000 a month, and you are wondering about selling it. Unfortunately, it’s a five-year finance option, or maybe even a seven-year finance deal, sold to you by the salesperson and the interest is ridiculous, and with the depreciation, your bike is not worth the amount you still own on it.
It’s not until four years down the line when you can finally sell your now very second-hand motorcycle for enough to cover what you owe on it. You’re then left with no motorcycle and a bucket-load of money gone. The initial R2000 per month instalment that you thought would be the cost to own this motorcycle has been closer to R5000 per month if you add all the costs including maintenance, fuel, depreciation, insurance and repairs.
It’s not all doom and gloom, though. There are ways to avoid this.
The first step is to not only look at the monthly instalment. That is an amount that you will be charged, but the question to be asked is over how many months will this instalment be charged until it’s done? If it’s five years or more, rather say no. The usual finance deals for motorcycles are over three years, although they will have higher monthly instalments. If the three-year option is too expensive, instead go for a cheaper motorcycle. Remember that this initial instalment might increase or decrease depending on the interest rate.
Remember to also take into account that finance requires compulsory insurance that could be costly. Look at service costs and try to take into account maintenance expenses like tyres, chains, brake pads, bearings, suspension servicing and anything else required for the next three years. Also, keep an eye on what the second-hand market is selling your bike for and know what the depreciation is. If your motorcycle loses value too quickly, you might not be able to sell it for what you owe the bank at the time.