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    Buy motorcycle with cash?

    So my neighbor apparently has enough money that he can buy a motorcycle with cash, but he's questioning whether to do so. My thought is that if he can't earn a higher rate of return investing the $$ somewhere else than the rate to finance the bike, he might as well purchase the bike with the cash.

    Any thoughts?

    #2
    I guess I am wondering why people are so against paying cash. I think it is easier and cleaner. Less worries about paying off the card, making sure you are not late. etc. we are finding that by paying as much as possible with cash we are spending less cuz we feel it instantly.

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      #3
      With something like a motorcycle, I'd be worried about possible problems and lack of paper trail paying in cash though. At least with a loan, you might have some recourse if it turns out to have all sorts of problems.

      I bought a computer with cash once. Biggest mistake ever. It did not work. The store I bought it from was very shady and charged me a 5% restocking fee to accept the return and since I didn't use a card, I couldn't dispute it with anyone other than the store who refused to budge. I got screwed because I used cash and since then, I do not use cash for anything that costs over $100.

      Doesn't mean I rack up a ton of debt. Just means I'm careful about just handing cash over in case of problems.

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        #4
        If he's buying it from a dealer, I don't see the problem in paying cash. Any type of warranty will be in the contract.

        We've always paid cash for the motorcycles we have purchased. Even when from a private owner. Just make sure to have everything in writing.

        Selling one for cash now...anyone in Texas interested? lol

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          #5
          When you finance, the bank will require certain levels of insurance such as deductibles as well as comprehensive coverage. That would be a potential extra cost many people don't think about.

          Probably the other big thing is just the whole mentality. If you're spending cash you know if you can afford something. If you're financing, it gets a little fuzzy. What if last week, your friend had the same pile of cash, but bought a boat on credit. This week, he still has the cash. It appears he is in the same financial situation he was last week, when in reality he isn't. If he's not very disciplined, he'll be more inclined to make another purchase.

          I'm not completely anti-credit, if used wisely, credit can be a great tool.

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            #6
            It is not only the purchase but the whole cost of onwership, I know a motorcycle can save on gas, but maintenance is more expensive than with a car. I don't remember exactly but my ex has one and each oil change was crazy!

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              #7
              I bought mine with cash - but it was only $1800 and I was expecting it to have some things that needed fixing. If I was buying something more expensive (like a new $10k from a dealer with a factory warranty), I would still be fine with paying in cash. Just make sure you have the warranty and purchase info on paper when you leave. I've bought cars with cash before too with no second thoughts about it.

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                #8
                Thanks everybody--yeah, I think it's a tough decision to buy a motorcycle no matter what payment method is used. Most people I know who've owned one have eventually sold it, either because they were in an accident or because they were starting a family, etc.

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                  #9
                  I purchased my current bike with cash (actually with credit card then paid off the card to get the points ) Also since I own the bike, it's an asset to me.

                  Currently I'm saving to upgrade the bike and I'll be paying for it the same exact way and it may take a couple of years to get it but I'd rather wait then to pay thousands in interest to the lender.

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                    #10
                    Originally posted by buildmybudget View Post
                    So my neighbor apparently has enough money that he can buy a motorcycle with cash, but he's questioning whether to do so. My thought is that if he can't earn a higher rate of return investing the $$ somewhere else than the rate to finance the bike, he might as well purchase the bike with the cash.

                    Any thoughts?
                    You had the right idea in your initial post. Compare the rate of return from investments to the available interest rate on the loan. If growth is greater than interest, then take a loan and invest the cash.

                    The one trump card here - often paying it off provides emotional or psychological benefit. Especially if the purchase amount is small, it's worth buying it outright instead of watching pennies roll in on the investment growth.

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