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  #1  
Old 02-24-2011, 01:24 PM
jtjohns jtjohns is offline
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Question Is this so bad??? (Finances)

Situation: I'm 26 yrs old and make roughly 60k and have a significant raise coming in June. I don't have any credit card debt or any debt at all aside from the Big Bad Ram. I still owe about 24-25k on it with a 3.7% interest rate.

Here's the deal. I've been riding motorcycles since high school. I sold my last bike just before the winter hit this past year and I'm desperate for another one. I found the exact bike I want and at a heck of a deal, but it's still a pretty penny. The bike is gonna run me around $8,500. I have enought in savings to pay for it in cash, but it would destroy my savings account. I spoke with a loan officer and I qualify for a 3.7% rate for the bike as well. I'm thinking about taking the loan route and paying the bike off in a lil over 2 years while still being able to save money each month, less obviously.

Please help me out and let me know if I'm thinking clearly or is this just bike fever.....
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Old 02-24-2011, 01:40 PM
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I would pay the cash...then it's done and over with and you can build up your finances again...at least then if something happens with your job, you don't have too much to worry about other than a payment on the RAM...I would buy it out right with cash OR put a HUGE down payment on it, and finance the rest over a year...at least you aren't burning up your savings and your payment is lower....and only for a year.
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Old 02-24-2011, 01:42 PM
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You will end up paying over $13,000 for the bike if you finance.???? I'd pay cash then focus on replenishing the savings account...Seems like a no brainer!!
Good luck!
What kind of bike??? Just curious.
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Old 02-24-2011, 01:52 PM
jtjohns jtjohns is offline
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Its a 2008 hayabusa. Already has every single mod I would do. I wouldn't pay 13000 for the bike. Even if I payed the min payment for the life of the loan I would pay around $630 in interest if I financed the whole thing. I would like to pay for it straight out but there's always that chance something can happen and its nice to have a financial cushion. I thought about payn 2-3 grand down that way the payments will be around 130/month but I don't know if payn that much down is beneficial because regardless of what the payment is, I will not pay less than $250/month.

Dos this even make sense?
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Old 02-24-2011, 02:00 PM
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Quote:
Originally Posted by CapperRAM View Post
You will end up paying over $13,000 for the bike if you finance.???? I'd pay cash then focus on replenishing the savings account...Seems like a no brainer!!
Good luck!
What kind of bike??? Just curious.
... how do you figure. If he pays it off in 2 years (like he plans) the payment should be $367.98 per month for a total of $8,831.47 at 3.7%. The longer you take the more intrest you pay, but 24 months isent that bad.

http://www.mlcalc.com/#loan-8500-2-3.7-3-2011-year
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Old 02-24-2011, 02:01 PM
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well just remember you have to make so much just to pay for it...of the money you make you have to pay taxes...so in order to make your payment how much money do you have to make??? really you are better to pay it with the money you already got...
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Old 02-24-2011, 02:18 PM
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My .02 is this...

You can easily make 8-10% on your money by investing correctly (IRA, etc). At a 3.7% interest rate, your money (in savings, matress, etc.) is better used to create a return on your investment that is much more than the 3.7. So, if it were me, no doubt I would take the financing offer. The money is better used elsewhere, and like you mentioned, you could have some unexpected expense or lose your job. If you finance, you at least would have the funds to live and continue payment on the Ram and the bike if you choose, or at least it would give you time to sell them to avoid repossesion.
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Old 02-24-2011, 02:26 PM
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Quote:
Originally Posted by dodgeman70592 View Post
My .02 is this...

You can easily make 8-10% on your money by investing correctly (IRA, etc). At a 3.7% interest rate, your money (in savings, matress, etc.) is better used to create a return on your investment that is much more than the 3.7. So, if it were me, no doubt I would take the financing offer. The money is better used elsewhere, and like you mentioned, you could have some unexpected expense or lose your job. If you finance, you at least would have the funds to live and continue payment on the Ram and the bike if you choose, or at least it would give you time to sell them to avoid repossesion.

This is right along the lines of how I'm thinking. So far, I'm getting around 12% return on my portfolio due to increase stock price and dividends. I figured if I were to pay cash for the bike, that's money that can be available to do something else. I still think I may end up putting down arond 2k, just so I can only take out around a 7k loan after taxes and all. This way it's well below nada value and I can easily sell it if something drastic does happen. I also figured, some of the cost of the bike would be offset by not putting gas in the Ram, but not depending on that as I will be riding more on the bike than I ever would in the Ram.

I just want to make sure I'm being rational and not making a huge financial mistake.
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Old 02-24-2011, 02:26 PM
jimmiefan jimmiefan is offline
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At your age - you still have a lot of time to save $$
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Old 02-24-2011, 04:09 PM
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Quote:
Originally Posted by dodgeman70592 View Post
My .02 is this...

You can easily make 8-10% on your money by investing correctly (IRA, etc). At a 3.7% interest rate, your money (in savings, matress, etc.) is better used to create a return on your investment that is much more than the 3.7. So, if it were me, no doubt I would take the financing offer. The money is better used elsewhere, and like you mentioned, you could have some unexpected expense or lose your job. If you finance, you at least would have the funds to live and continue payment on the Ram and the bike if you choose, or at least it would give you time to sell them to avoid repossesion.
I agree with that .02, so good luck man, but that's what I would do as well if it were me.

- Cajun
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