Constructive advice needed please
Exactly right.
Good friend of mine is a banker. He was approached a few weeks ago by a client of his...seriously rich guy, mid 8-figure net worth kind of assets...who was looking to add to his vehicle collection. He had about $500k worth of vehicles picked out and wanted to finance them.
If you're a guy with $65 million in assets, all spread throughout a bunch of investments with various degrees of liquidity, and you decide to borrow money to buy some toys equal to 0.75% of your net worth, that's one thing.
But if you are not that guy, if you are a guy for whom a $300/mo payment leaves you feeling that you might be over-extending your ability to pay, if you are a guy for whom the idea of having $25,000 of actual cash in the bank seems like a distant dream, then IMO you've got no business borrowing money to finance a bike. It has nothing to do with the low interest rates available today. It has everything to do with falling into the consumerism credit-trap and setting yourself up to stay poor forever.
Good friend of mine is a banker. He was approached a few weeks ago by a client of his...seriously rich guy, mid 8-figure net worth kind of assets...who was looking to add to his vehicle collection. He had about $500k worth of vehicles picked out and wanted to finance them.
If you're a guy with $65 million in assets, all spread throughout a bunch of investments with various degrees of liquidity, and you decide to borrow money to buy some toys equal to 0.75% of your net worth, that's one thing.
But if you are not that guy, if you are a guy for whom a $300/mo payment leaves you feeling that you might be over-extending your ability to pay, if you are a guy for whom the idea of having $25,000 of actual cash in the bank seems like a distant dream, then IMO you've got no business borrowing money to finance a bike. It has nothing to do with the low interest rates available today. It has everything to do with falling into the consumerism credit-trap and setting yourself up to stay poor forever.
Tourer
Joined: Mar 2015
Posts: 345
Likes: 3
From: New Jersey
I have to say this cause I know how it feels. Damn I can't eat for 2 days. But I paid my bike. I can't pay the phone this month. But I paid my bike. Damn no clean clothes. But paid my bike. Damn can't pay my bike. Wtf am I going to do.....
I know what I had to do. Question is when time comes what are you going to have to do
GO FOR IT dept is the American way
I know what I had to do. Question is when time comes what are you going to have to do
GO FOR IT dept is the American way
Seasoned HDF Member
Joined: Feb 2010
Posts: 5,618
Likes: 5,144
From: Green Country
We never know how long we'll be on this earth. As has been pointed out, you are the best judge of your finances. Sounds like your wife enjoys your new-found hobby also; I'd talk to her. If she's good with it and it's something y'all can enjoy together, go for it.
Road Master
Joined: Aug 2013
Posts: 941
Likes: 9
From: Denver, CO
ApeHanger is exactly right. "Make your money work for you." Here's the thing about interest rates...a bank is never going to offer you a loan for less interest than what they are paying on people's CD's and savings accounts because that is a money loser for the bank. So it really doesn't matter what interest rates are.
However, many car manufacturers have their own in-house loan program that can afford to offer lower interest rate loans because they are making money on both sides of the deal, the profit from the product, and the interest on the loan.
If you are wise enough to invest your money, you can safely get around 4-5% returns right now (not in a savings account or CD at a bank). Ergo, if you can find loans for 3% or less, factor in the loan processing fee and see if the total cost of the loan (interest + orgination) over the life of the loan equals out to or less than the returns on your investment. If it does, even someone who could show up with 30k in hundeddolla bills should finance.
Road Master
Joined: Aug 2013
Posts: 941
Likes: 9
From: Denver, CO
And I think some dealers are even offering lower. But even still. If Op can get full MSRP for the sporty on trade, get 1.9% on the new loan, AND get some skimmed off the price for it being a 2014 model leftover, this decision should really be a no-brainer IF he can truly afford the increased payment.
My general rule of thumb is to never take on payments that reduce my monthly cash-flow (money left over after ALL expenses and bills are paid) below a certain threshold. That threshold is usually 20% of my monthly income. Most advisors recommend a minimum 10% of monthly income be put into savings/investment for the future. Only OP knows what his balance sheet will look like with the added payment.
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Cruiser
Joined: Sep 2014
Posts: 159
Likes: 0
From: Okinawa
If that 300 is gonna put a hardship on your finances, I'd keep the sporty another year at least until you have some equity. However, another year and more miles on the sporty will lower its value also. Hell, trade in the sporty on a good used SG. Nothing wrong with one made in the 2000's.
Road Master
Joined: Aug 2013
Posts: 941
Likes: 9
From: Denver, CO
Do you hve cash on hand to buy used? If not, and you want the 103, there's no point in buying used in your situation because used vehicle loans come with higher interest rates and you'd need a '11-'13.
Between the cost difference of the loans, sales price, and what you would lose on your sporty if you don't get a full MSRP trade-in price for it, you'll actually be spending the same as if you just bought a new 14 or 15 at the lower interest rate with the full MSRP trade-in on the sporty.
Don't overthink this. Either you can afford the monthly payment for the new SG, or you can't. Your OL likes the bigger bike, as do you. If you can truly afford it, do it. If you can't, stick with the sporty until you can.