*Usually* when peeps borrow for a depreciating 'asset' they are trying to live the champagne lifestyle on the beer budget; trying to walk before they can crawl, having ideas above their station, WANTing something in excess of what they NEED.
OP is a case in point. Yes they can afford circa 2500$ for a vehicle (motorbike or car doesn't matter) which IS ENOUGH to get a serviceable unit, but oh now they want a flash dog and so finance it (to 8500) which actually ends up holding them back financially.
These are the facts as I see them :)
nukhelenc,
Nov 6, 7:55am
Ive asked ya mate to stop stalking me, now im asking you to stop it. I have in actual fact reported you to Trademe. Keep it up and i will report you every time from now on.
bellky,
Nov 6, 7:58am
Fuck off cunt.
16feb08,
Nov 6, 8:02am
The thing is belky, no one really gives a shit about what you think. And judging by your comment above, we will get the pleasure of not having to listen to you for a while.
bellky,
Nov 6, 8:45am
Wrong on both counts^. Stick to lurking (instead of being abusive) and try not to live beyond your means is my advice :)
kazbanz,
Nov 6, 9:57am
sok --I was takin the mickey.
budgel,
Nov 6, 10:06am
SMAC,I never thought the phrase was that catchy, but it is sound advice nevertheless. The example you give is a bit different from a youngster who is going to be borrowing the majority of the value of the bike, and will have to pay insurance on top of the purchase price (if he can get it). If he cant, and then prangs the bike,there will be an even worse financial outcome.
However one looks at it, it isnt a financially wise move.
It is an opinion I offered, you have a different one.
smac,
Nov 6, 10:17am
I don't think it's that different. In the case of a youngster borrowing to get into/onto their first ride, what do you suggest they do in the meantime while they save!
The point here is that yes in some cases borrowing for a vehicle may well be a really dumb idea. But the reason isn't because the vehicle depreciates, and that's the issue I have with that statement.
Because it uses the jargon 'depreciating asset' it implies to the layperson that there is some hugely important financial principle behind the statement, and there really isn't. Sometimes people NEED to borrow to get by, sometimes that's a really poor choice but it's got nothing to do with the future resale value of what is being borrowed for (could be a house, a car, the dentist etc etc).
bellky,
Nov 6, 10:27am
Lol.
Depreciating means it goes down in value in nominal and real terms, and it will. Borrowing on an asset like that is thick.
Quote smac: ".what do you suggest they do in the meantime while they save!." Have you been watching! Just get a cheaper bike of course.
budgel,
Nov 6, 10:32am
Ok, I think you have read a nuance into the word "asset" that I never intended. My apologies. What word would have fitted better! I do think the principle of not borrowing for things that will be worth little in time is a hugely important principle, vs say borrowing for a business or house. It is the youngsters that need to be educated into financial prudence, as they tend to be unaware of the double whammy effect of paying interest and ending up with something that is worth a fraction ofthe real cost of buying it.
The youngster could buy a quite reasonable bike with the money he has and keep saving towards a future upgrade.
I understand that there is sometimes a need to borrow. Buying amotorbike is not one of those needs.
Thanks for the discussion.
16feb08,
Nov 6, 10:49am
Smac and budgel you both have fair and valid points. My son does "need" a bike, however he doesn't need this particular one. He "wants" it.He needs his own transport to work and he wants his transport to be of the 2 wheeled variety. I'm sure he will still be enjoying the ride long after he's forgotten the 12 months it will take him to pay it off ;)
n1smo_gtir,
Nov 6, 10:52am
Got to start the learning process somewhere. A bike which a young one really enjoy, he will put the effort into paying off timely. Yes it will lose value, but gain value of learning to be responsible with keeping up with payments which goes in hand with paying mortgage for house later on. He will start n earn a good credit history if he's disciplined with repayments.
kazbanz,
Nov 6, 2:31pm
16feb--the gsx650 isn't a sport bike. At "best" its a sport tourer. I'd hesitate to go that far to be honest. Id describe it as a comfortable mile eater with a comfortable riding position Im hearing alarm bells though.What riding experience has this lad had!
16feb08,
Nov 6, 2:48pm
well, its more sporty than my last bike lol (a 1340 h-d low rider). This will be his second bike and from what your saying the riding position would suit him well. Hes been riding a 250 for about a year but hes a big boy and the poor thing struggles a bit under him. I know the gsx-f isnt learner approved but the gsx-fu is, and thats just a de-rated version. I reckon the extra kilowatts this bike has is evened out by the 30 - 40kg over the 80kg rider allowance that he puts on the bike;)
bwg11,
Nov 6, 2:49pm
Not so in all cases if you do the sums:
$8500 added to a 5.90% mortgage with 15 years to run will add $71.27 to the monthly payment, but over the term of the mortgage, addded interest on the $8500 will be $4328.
Whereas, $8500 financed for 3 years at 14% will have monthly payments of $341.78. The total interest in this case is $2304 - $2024 less than putting it on the mortgage.
smac,
Nov 6, 2:58pm
I meant mortgage as in using the house as the security rather than the vehicle. Doesn't mean you go with the term of the home loan though. Most lenders will do a 'top up' with a different term, so no reason why the term would be any different than a personal or vehicle loan. The difference being you're paying 5.X % not 14+.
kazbanz,
Nov 6, 3:13pm
Hey its a nice mid sized bike BUT keep in mind if its financed it has to be insured. If its not an approved bike for him to ride then he isn't gonna get insurance
kazbanz,
Nov 6, 3:36pm
The CBR is a great sports tourer (yea repeating myself).Really strong engine and handle not bad. A bit of a heavy bike to chuck around IMO.
16feb08,
Nov 6, 3:57pm
I'm not into going everywhere at light speed personally, I'm probably too lazy to be chucking bikes around now anyway. I've just realised my 18yr old son can afford more of a toy to play with than I can. oh where did I go wrong!
3tomany,
Nov 6, 4:32pm
spending cash on depreciating items is even dumber, if you have 8k in cash invest it wisely over 10 years and pay the hp of in 2 or 3 years thats how people get rich. wasting saved money on depreciating assets isnt realy saving at all it is spending
gunhand,
Nov 6, 4:47pm
Hi again, seems like the thread is going well, in some areas anyway. Im only going to repeat really whats been said above but Im sure a bit of reinforcement won't matter. Both bikes are very good. The GSX is a really good mid range bike and will do as much as any "BIG" bike will unless you want 300kph bragging rights.It will be an all day tourer if you want and will go round corners quite well if pushed. It will have more basic suspension than big doller bikes but what it has is ample for most. It will be a low maintance machine if he looks after it well.I see it has an after market pipe, all good if thats his thing. Being young it probably will be. That bike will be very economical fuel wise as well. The CBRs are pretty bullet proof old girls and do everyhing well. Very comfy but thats useually due to the suspension being worn out (unless dealt with recently) as most seem to be. Its not a bad thing but will stop it handling as good as it could but if ya not into that it wont matter to much. I ridden a few of those and there a good all rounder really. And the 650 won't be that far behind it performance wise and will out handle it. As for the whole finance thing, if hes only doing for a year even better as he won't pay huge interest. And try the bike shop for finance as well as they can do as good as anyone alot of time. I actaully agree that financing a depreciating asset (which it actually isnt till paid for) isn't the best but as ive said if you can do it and all other things a taken care of then why not.You dont get much for $2000 anymore and a 4 year old bike is better than any 20 year old bike unless your into older bikes,and many are. Ive financed bikes in the past and I couldnt give a rats arse what others think of it. My bills are payed my kids are feed the wifes happy as well so Ill pay off a bike if I bloody well want to. Go fourth and motorcycle and enjoy it.Except the bloody rego cost LOL.
mugenb20b,
Nov 6, 4:47pm
Well, no it's not, as you have no interest to pay. I do agree with investing cash though, but there has to be a fine line somewhere on how much to spend on a car for yourself. You are not exactly going to be driving $500 shitters with 0 safety rating all your life now, are you!
16feb08,
Nov 6, 4:56pm
Oh jeesus, are we still on that old chestnut. It's been a kinda long day and where I'm at now if he can get the finance, and he can afford it, then he can go for it as far as I'm concerned. Further. it may now be 2 bikes going on finance hahaha
carstauranga001,
Nov 6, 5:01pm
Good post IMO.
16feb08,
Nov 6, 5:02pm
gunhand wrote: Hi again, seems like the thread is going well, in some areas anyway.
I'm on to 2 pages! I am really proud of myself. It's been a long road with it's up and downs. Got the usual haters along the way but I also got the useful advice I was after and I had fun. So all in all, this has been an interesting journey. Kinda what motorcycling as all about innit ;)
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