on-line tools
loan calculator
tell a friend
bookmark 01Wholesale.com
Browse by post type
Offer to Buy
Offer to Sell
Retailer Offer
Import Wanted
Export Offered
Offer to Partner
Request for Tender
Dropshipping Wanted
Dropshipping Offered
Company Profile
Trade Show
 Article
Members Directory
Exporters
Retailers
Importers
Manufacturers
Wholesalers
Individual Buyers
Dropshippers
Trade Show Representatives
Trade Consultants
Insurance Agents
Market Researchers
Freight Forwarders
Trade Advocacy Services
Individual Sellers
Auction Sellers
Franchisers
Franchisees
Auctioneers
01Wholesale Friends
|
|
Welcome to the world of “upside down” motorcycle loans!
|
Pageviews: 796
|
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 “upside 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 upside 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 “upside 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 “upside 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.
About the Author
Jay Fran is a successful author at http://www.motorcycle-financing-guide.com. A comprehensive resource on motorcycle financing, bad credit motorcycle loans, high risk motorcycle loans and Motorcycle Buying Tips.
Copyright (c) 2004, by Jay Fran. This article may be freely distributed as long as one of the copyright, author's information and the above “exact” live link is published with the article.
|
|
Contact Information of poster
| Company Name: |
Motorcycle Financing Guide |
| Contact Person: |
Jay Fran |
| Country |
, us  |
| Zip Code: |
4234 |
| About Motorcycle Financing Guide: |
A comprehensive resource on motorcycle financing, bad credit motorcycle loans, high risk motorcycle loans and motorcycle buying.
|
|
|
Statistics for " Welcome to the world of “upside down” motorcycle loans!":
|
| Detailed Pageviews:
|
796 ( number of times this page was viewed)
|
|
Last Update:
|
2005-03-05 02:12:02
|
More Import/Export Wholesale Leads trade leads ...
|
| |
|
Automotive and Transports 
Salt lamps
Personal Secured Loans - Personal Unsecured Loans - Secured Unsecured
Nissan Dumpers WANTED
heater
clay, kaolin
DYNAMIC 3D Decorative Wallpaper, World Unique & Panoramic
business nike trading
Tractor Spare Parts
EXPORTER OF ALL KIND OF USED CARS FROM JAPAN
bape hoody at www.nike-888.com(nikefish2008 at hotmail.com)
pvc hose