financing questions and tips

Geester said:

Unfortunately I have to finance the R3 in order to start riding rather than waiting. With that said I am not sure what is fully involved in this and what leverage (if any) I might have. Also, I have heard other members mention "Gap Insurance", "Extended Warranties". I dont want to get suckered in getting something I dont have to get in order so they (dealer) can get more money out of me. Can someone give me some advise as to some of the things that come with financing that I HAVE to have. My credit isnt the best but not the worst, can I still negotiate the OTD price. Any tips as how to call the dealer rather than driver all around town?
Any help would be appreciated. thanks.

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Gap Insurance is a coverage that will pay the difference between what your regular insurance will pay for a totaled or stolen, etc. bike and what you owe on the bike at the time you put in the claim. Say your insurance will give you $3,500 on a claim for a totaled bike and you owe $4,200, then the Gap Ins. will pay the $700 difference.

Some lenders will require you get Gap Ins. if you don't have much of a credit history or your FICO credit score is below a certain number. Yamaha dealers use Synchrony Bank a lot for customer financing. I think they may have a deal going with them.

Gap Ins. isn't usually regarded as necessary for a purchase as low as the R3s price OTD.

Extended Warranties give you Peace Of Mind in case anything breaks on the bike after the factory warranty runs out at 12 months. My experience is that modern bikes don't break, so I never buy extended warranties. IF you were using the bike as a commuter and put a LOT of miles on it per year (like 10K or more per year), you MIGHT want to get the extended warranty.

You can still negotiate the OTD price. This time of year, as we get closer to End of Motorcycling Season, dealers will start reducing the prices on their R3s and MAY lower or drop any Freight & Setup charges they have been adding throughout the Summer. It's worth trying to the charges dropped on both the bike cost and any dealer add-ons. You can usually get a discount on any accessories and gear that you buy at the same time as the bike, too. 15% is usually the maximum discount offered on accessories, but on gear it can be as much as 50%, depending on the dealership. Sales are slowing down in most areas of the country ( sales may not slow down until November in warmer areas) and dealers don't want to have to pay "Flooring Fees" to their lender on unsold bikes, so they try to get them out the door, even it means they just break even on the deal.

Your finance % rate will be based on your credit score. That wouldn't be negotiable since it's set by the lender.

If you live somewhere near a Costco, call them and see if they have a buying plan set up with any local dealership(s). This is usually the easiest way to buy. The price is already fixed, no haggling, and is usually a good deal.

You just join COSTCO for $50, they give you a Gift Card back for $25-$50 and tell you who to see at the dealership. Some Forum members have gotten REALLY good prices this way. Put COSTCO in the Forum search box to find them.

Alternately, you can just call each dealership and ask for an OTD price from a salesman. DEFINITELY let them know you are shopping around for the best price and make sure they give you the TOTAL OTD price.

Hope this helps some.....

Some additional to Fangs comments.

Don't let them know you are financing when you call.

Check out your local credit union also. I have found financing is usually lower through them instead of Yamaha or the dealerships finance company.

At least through my credit union, the finance rates are set based upon year of the vehicle and length of the loan. Not so much your credit score. Yes, you still need to qualify, but they aren't going to jack up the interest rate on you. Current rates at my credit union is 2.99% for up to 65 months on a 2009-2015 vehicle. Payment would be approximately $98/month on a $5500 loan at that rate. Dealer finance companies usually treat you more like you are getting a credit card and charge huge interest rates if they determine you are a high risk.

You may also want to look into getting a co-signer, like a parent. The co-signer agrees to take responsibility for the loan if you fail to make payments. As long as the co-signer has a good credit score, it is much easier to get a loan. That is how I started out raising my credit.

You aren't just shopping around for the lowest price on a bike. You are also shopping around for the lowest cost to finance.

Costco is a great resource. Plus they have a lot of good prices overall. Their meat department rocks too. Love their steaks.

Do not walk in the door and tell them you are financing the bike. I walked in, asked what the OTD price would be and was told about $5800 (in April). I then asked if he could match a price from another dealer in my state of $5300 OTD that I found on the forum. I then said I'd buy it this week if he could match it. He crunched the numbers and in a couple minutes was able to. Then I told him I'd need financing and got approved through the Capital One Yamaha card @ 8.99%. I'm 19 and had a 750 credit score at the time. I also knew I wouldn't be able to get a cosigner and my credit union doesn't give motorcycle loans anymore. I came back a few days later and applied for the card over the phone the day before I was picking it up. Rode out of the dealership around a hour and a half later! Most of that time was spent purchasing an insurance policy.

I added the 3 year extended warranty for ~$350 (first was offered it for $599). Only reason being that it is a new model/engine and I put a lot of miles on my bikes. It is inexpensive peace of mind and added less than $5/month to my payments. I wasn't offerred GAP insurance but I did add it when I financed my Jeep through my credit union. It is much more useful on a car as they depreciate at a much higher rate ,especially on a new and expensive car.