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Welcome To The World Of "Upside Down" Motorcycle Loans!
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 motorcycle 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 motorcycle 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 motorcycle 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 motorcycle 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 motorcycle 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 motorcycle 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.
Latest News:Site: Yahoo! News Search Results for news JCDecaux in talks for News Outdoor Group in Russia (AP via Yahoo! News) French outdoor advertising firm JCDecaux SA said Thursday it is negotiating to buy Russian rival News Outdoor Group from global media company News Corp. JCDecaux and News Corp. in talks to combine outdoor ad groups (International Herald Tribune) The News Corp. chief executive, Rupert Murdoch, has recently expressed nervousness about investments in Russia, where News Outdoor generated the bulk of its revenue last year. News Corp tightens grip on Premiere with new CEO (Reuters via Yahoo! News) Rupert Murdoch tightened his grip on German pay-TV broadcaster Premiere by appointing News Corp executive Mark Williams as CEO in a move to get the company back on track. News Corp says Mark Williams interim Premiere CEO (Reuters via Yahoo! News) News Corp. executive Mark Williams has taken over as chief executive of German pay-TV broadcaster Premiere in an interim capacity, News Corp. said after the move led to renewed takeover speculation. News Corp. says Mark Williams interim Premiere CEO (Reuters via Yahoo! News) Mark Williams, a News Corp. executive named late on Wednesday as chief executive of German pay-TV broadcaster Premiere, has taken over in an interim capacity, a News Corp. spokeswoman said on Thursday. Weekly world news quiz (BBC News) At the end of another week, test your knowledge with our world news quiz. JCDecaux in talks to buy News Corp. billboard unit (AP via Yahoo! Finance) In a deal that would create the world's largest outdoor advertising company, French conglomerate JCDecaux SA said Thursday that it is in talks to buy Russian rival News Outdoor Group from global media company News Corp. UPI NewsTrack Entertainment News (UPI) Kanye arrested in paparazzi scuffle ... Report: Critic smacked Ebert with binder ... Cafe Tacvba nominated for 6 Latin Grammys ... Groban to perform TV songs at Emmys ... News from United Press International. United shares climb after news debacle (UPI) CHICAGO, Sept. 11 (UPI) -- A computer program assigning dates to news stories was partly to blame for a sell-off of United Airlines stock Monday, a Google spokesman said. JCDecaux in talks for News Outdoor Group in Russia (San Francisco Chronicle) French outdoor advertising firm JCDecaux SA said Thursday it is negotiating to buy Russian rival News Outdoor Group from global media company News Corp. In a statement, the global seller of outdoor advertising said it was in exclusive talks with Rupert... Site: news - Google News Staunton News Leader lays off 10, cuts 5 positions - CNNMoney.com
MORE RESOURCES: Site: Yahoo! News Search Results for motorcycles New motorcycles to be fitted with new In?Vehicle Units (Channel NewsAsia via Yahoo! Philippines News) SINGAPORE : From Wednesday, all new motorcycles have to be fitted with new In?Vehicle Units. Grupo Elektra May Begin Selling Motorcycles in Brazil Next Year (Bloomberg.com) Sept. 10 (Bloomberg) -- Grupo Elektra SA, Mexico's largest electronics retailer, plans to begin selling motorcycles in Brazil next year and may build an assembly plant there by 2010 or 2011, the chief executive officer of its motorcycle unit said. Honda, Yamaha Will Debut Electric Motorcycles, Nikkei Says (Bloomberg.com) Sept. 11 (Bloomberg) -- Honda Motor Co. and Yamaha Motor Co. will begin selling electric motorcycles as soon as 2010, Nikkei English News reported, without citing anyone. Names released of those involved in accident involving car, two motorcycles (Crookston Daily Times) This afternoon, the Polk County Sheriff's Office released the names of those injured in an accident near Union Lake Sunday involving a car and two motorcycles. Motorcycles good on gas, but how safe are they? (Cy-Fair Sun) With the drastic recent increase in gas prices, many people have started utilizing motorcycles for a primary source of transportation. New motorcycles to be fitted with new In-Vehicle Units (Channel NewsAsia) SINGAPORE : From Wednesday, all new motorcycles have to be fitted with new In-Vehicle Units. These are meant to make paying electronic road charges hassle free. Culture moves in cycles - motorcycles, that is (Lancaster Online) Motorcycle lovers, this weekend is for you. The Lancaster Museum of Art is sponsoring Barnstorm Weekend, which will celebrate all things hog, with tours throughout the county, a chance to ride your bike around Clipper Stadium, and the opportunity to meet fellow enthusiasts. "This i... Show fuses motorcycles, music (Rapid City Journal) Just as some are recovering from the rally-induced motorcycle mania, the Rushmore Plaza Civic Center is gearing up for Motopsycho Mania, a live-action extreme motorcycle stunt show mixed with the high-energy rock ?n? roll of Sevendust, Drowning Pool, Nonpoint, Means to an End and Opiate for the Masses. City to buy motorcycles for cops (Sun Star) THE Dumaguete City Council will give up its earlier plan of procuring cellphones for the legislators and instead realign the allotted amount to purchase at least three big motorcycles for the policemen. Released car-accident material lacks crucial information (Los Angeles Times) NHTSA publishes data on serious crashes, but manufacturers' claims keep information on the tires, child seats and motorcycles confidential. Long-awaited information on serious vehicle accidents was released to the public Wednesday by the federal government, but crucial data on tires and child-safety seats was withheld. Site: motorcycles - Google News SHELBURNE MUSEUM ANNOUNCES MOTORCYCLE EXHIBIT IN 2009 - Motorcyclist Magazine
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