Hey all, looking for a little advice for a family member, as this isn't my area of expertise. 18 Y/O in the family is getting a small motorcycle to practice on so he can ride with his father and others. Current one catching his eye is a 2010 Ninja 250r, which we all recommended as a decent starter (any objections to that that I didn't think about?) Anyway, asking price is $2500. His father wants him to finance a small part of the purchase to teach him about how loans and everything work. He currently has a credit card that can be used only for 'approved purchases;, and a small monthly payment to Snap On for tools (college) He can afford up to $150 per month, roughly. Anyway, what is a good % to put down on a bike for an 18 year old, with limited credit history? He's never missed payments or anything like that, so there shouldn't be anything negative in his report. I could make an educated guess had this been a car loan, but as far as bikes I'm not to familiar. Thanks!
How much should be put down?
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Put down as much as possible, so that you don't pay interest charges needlessly. Work it out so that he has a 1-year loan with $50/month payment. Not more than that.
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If he can't pay cash for such a miniscule expense, he shouldn't be buying it. His father should be teaching him about how bad paying interest is. No 18 y/o should be riding a motorcycle.
Youth is wasted on the young.
Youth is wasted on the young.
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Originally Posted By: Quattro Pete
Put down as much as possible, so that you don't pay interest charges needlessly. Work it out so that he has a 1-year loan with $50/month payment. Not more than that.
Pretty good lesson without overly wasting interest costs....thumbs up pete.
Put down as much as possible, so that you don't pay interest charges needlessly. Work it out so that he has a 1-year loan with $50/month payment. Not more than that.
Pretty good lesson without overly wasting interest costs....thumbs up pete.
Originally Posted By: Oil Changer
If he can't pay cash for such a miniscule expense, he shouldn't be buying it. His father should be teaching him about how bad paying interest is. No 18 y/o should be riding a motorcycle.
Youth is wasted on the young.
I'll have to disagree a little, although 18 is young to ride a bike I think as long as the rider is responsible enough and leans from people with experience they will be just fine
If he can't pay cash for such a miniscule expense, he shouldn't be buying it. His father should be teaching him about how bad paying interest is. No 18 y/o should be riding a motorcycle.
Youth is wasted on the young.
I'll have to disagree a little, although 18 is young to ride a bike I think as long as the rider is responsible enough and leans from people with experience they will be just fine
Originally Posted By: Quattro Pete
Put down as much as possible, so that you don't pay interest charges needlessly. Work it out so that he has a 1-year loan with $50/month payment. Not more than that.
Agreed, I can't speak for motorcycles but in the past when I offered to pay 50% down on a new (to me) vehicle the dealership has let go with minimum coverage.
It will help the teen possibly save some money.
Put down as much as possible, so that you don't pay interest charges needlessly. Work it out so that he has a 1-year loan with $50/month payment. Not more than that.
Agreed, I can't speak for motorcycles but in the past when I offered to pay 50% down on a new (to me) vehicle the dealership has let go with minimum coverage.
It will help the teen possibly save some money.
First, try to get a loan with a local credit union. Usually they have lower interest rate than banks and/or other financial institutions. If he didn't have account with a credit union, open 1 and transfer current saving/checking to credit union.
Monthly payment should be $100/mo or less and loan duration should be 2 years or less, so down payment could as little as $500 or as high as $2,000.
Since he has limited credit, this small loan will improve his credit score.
Monthly payment should be $100/mo or less and loan duration should be 2 years or less, so down payment could as little as $500 or as high as $2,000.
Since he has limited credit, this small loan will improve his credit score.
Nothing to add here...
1) Put down as much as possible
2) Finance as little as possible
3) He should check online resources as well as the larger finance companies (Capital One, CitiFinancial, Wells Fargo). Most credit unions remarket the access to capital provided by the big finance companies.
4) Do NOT go cheap on the insurance. He needs to be covered in case of injury and the cost of hospital stays and emergency rooms can be shockingly expensive. Get a $500 deductible with a 100k to 300k policy.
I don't think this is a good idea. Every week I get to see motorcycles that are totaled testaments to the lives that were lost. About 20 of the really bad ones arrive at the salvage auctions out here and trust me, they will make your soul cringe. I did well in school, but I'm glad I held off on my riding days until I had some more on the road experience. I rode for about five years and called it an experience. He's much better off with a car.
All the best!
1) Put down as much as possible
2) Finance as little as possible
3) He should check online resources as well as the larger finance companies (Capital One, CitiFinancial, Wells Fargo). Most credit unions remarket the access to capital provided by the big finance companies.
4) Do NOT go cheap on the insurance. He needs to be covered in case of injury and the cost of hospital stays and emergency rooms can be shockingly expensive. Get a $500 deductible with a 100k to 300k policy.
I don't think this is a good idea. Every week I get to see motorcycles that are totaled testaments to the lives that were lost. About 20 of the really bad ones arrive at the salvage auctions out here and trust me, they will make your soul cringe. I did well in school, but I'm glad I held off on my riding days until I had some more on the road experience. I rode for about five years and called it an experience. He's much better off with a car.
All the best!
JHZR2
Staff member
Originally Posted By: Quattro Pete
Put down as much as possible, so that you don't pay interest charges needlessly. Work it out so that he has a 1-year loan with $50/month payment. Not more than that.
+1. Finances are just math, not sure why much practice would be needed, particularly if lines of credit with snap on and others are already held.
If he doesn't have the means to pay the whole thing cash (and maintain the balance in reserve if he insists having a loan), then he can't afford to have a toy like that.
Put down as much as possible, so that you don't pay interest charges needlessly. Work it out so that he has a 1-year loan with $50/month payment. Not more than that.
+1. Finances are just math, not sure why much practice would be needed, particularly if lines of credit with snap on and others are already held.
If he doesn't have the means to pay the whole thing cash (and maintain the balance in reserve if he insists having a loan), then he can't afford to have a toy like that.
Originally Posted By: Oil Changer
If he can't pay cash for such a miniscule expense, he shouldn't be buying it. His father should be teaching him about how bad paying interest is. No 18 y/o should be riding a motorcycle.
Youth is wasted on the young.
You are kidding right. You can go to war at 18. You should be able to ride a motorcycle also.
If he can't pay cash for such a miniscule expense, he shouldn't be buying it. His father should be teaching him about how bad paying interest is. No 18 y/o should be riding a motorcycle.
Youth is wasted on the young.
You are kidding right. You can go to war at 18. You should be able to ride a motorcycle also.
I started riding motorcycles at age 12 on dirtbikes so I think 18 is just fine to start on a streetbike as long as he is responsible. It sounds like he has a group to ride with and should be just fine. I also think a small loan is a good idea too. Experience in making the payment plus it gets his credit started since at age 18 I barely had any.
Originally Posted By: Quattro Pete
Put down as much as possible, so that you don't pay interest charges needlessly. Work it out so that he has a 1-year loan with $50/month payment. Not more than that.
+1 He needs to start building his credit score, he cant do that paying for everything in cash. You have to let the banks make a little in return.
$50-75 a month for a year sounds just right.
Put down as much as possible, so that you don't pay interest charges needlessly. Work it out so that he has a 1-year loan with $50/month payment. Not more than that.
+1 He needs to start building his credit score, he cant do that paying for everything in cash. You have to let the banks make a little in return.
$50-75 a month for a year sounds just right.
It may send the wrong message in life if you cannot afford a toy finance it.
My parents never took loans for anything and taught me to save and then buy it. I have one had one loan for a vehicle for a year.
Pay cash.
My parents never took loans for anything and taught me to save and then buy it. I have one had one loan for a vehicle for a year.
Pay cash.
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IF the goal is to teach him about financing, I'd guide him in choosing how much he puts down. Let him think about it. Let him decide. Get his input. Go to a bank, credit union, etc for financing. I wouldn't use a credit card. The price of the bike seems a little high to me so i'd teach him how to negotiate the best purchase price by doing is homework in choosing the "right" bike first.
Since the loans are simple interest, he can always pay ahead. I'd make sure, as an 18 year old, he got a good taste of what those monthly payments taste like every month after month after month. Probably be very beneficial for he and his family in later years.
This strategy worked like a charm with both of our children. They now HATE payments and will do whatever they can to avoid them!
Since the loans are simple interest, he can always pay ahead. I'd make sure, as an 18 year old, he got a good taste of what those monthly payments taste like every month after month after month. Probably be very beneficial for he and his family in later years.
This strategy worked like a charm with both of our children. They now HATE payments and will do whatever they can to avoid them!
It depends, he'd feel the pain of paying $2500 and remember that and respect it and treat the bike right.
Though if he pays $1500 and then has a monthly nut that might spread the pain. You want pain.
He'll need comprehensive insurance with a lien, and his liability/ bodily injury is already going to be very pricy.
I hope he isn't the personality of, I'm paying $2k a year just for it to sit there, might as well ride the heck out of it.
Though if he pays $1500 and then has a monthly nut that might spread the pain. You want pain.
He'll need comprehensive insurance with a lien, and his liability/ bodily injury is already going to be very pricy.
I hope he isn't the personality of, I'm paying $2k a year just for it to sit there, might as well ride the heck out of it.
Originally Posted By: Gebo
IF the goal is to teach him about financing, I'd guide him in choosing how much he puts down. Let him think about it. Let him decide. Get his input. Go to a bank, credit union, etc for financing. I wouldn't use a credit card. The price of the bike seems a little high to me so i'd teach him how to negotiate the best purchase price by doing is homework in choosing the "right" bike first.
Since the loans are simple interest, he can always pay ahead. I'd make sure, as an 18 year old, he got a good taste of what those monthly payments taste like every month after month after month. Probably be very beneficial for he and his family in later years.
This strategy worked like a charm with both of our children. They now HATE payments and will do whatever they can to avoid them!
+1 Totally agree.
IF the goal is to teach him about financing, I'd guide him in choosing how much he puts down. Let him think about it. Let him decide. Get his input. Go to a bank, credit union, etc for financing. I wouldn't use a credit card. The price of the bike seems a little high to me so i'd teach him how to negotiate the best purchase price by doing is homework in choosing the "right" bike first.
Since the loans are simple interest, he can always pay ahead. I'd make sure, as an 18 year old, he got a good taste of what those monthly payments taste like every month after month after month. Probably be very beneficial for he and his family in later years.
This strategy worked like a charm with both of our children. They now HATE payments and will do whatever they can to avoid them!
+1 Totally agree.
gathermewool
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Originally Posted By: madRiver
It may send the wrong message in life if you cannot afford a toy finance it.
My parents never took loans for anything and taught me to save and then buy it. I have one had one loan for a vehicle for a year.
Pay cash.
My dad used to be that way, when I was a kid. He drove $500 beaters, but still had enough to buy a small boat to go crabbing in. He also rented a nice little house with a lawn, in an ok neighborhood.
We've both evolved into using credit for many things. I let the credit card companies literally pay me to use them. I've also chosen to take out long (60 months) auto loans, at the lowest possible interest rate. If I'm going to make the already terrible financial decision to buy a new car, why would I take money out of stocks and savings just to pay for a vehicle, when it can be had for 1-2%, and sometimes 0% financing?
As for the OP, it sounds like he already has a line of credit that is helping him out. It's revolving, which won't help as much as an auto loan, but I don't see a reason for taking a loan out on a toy. For social and financial reasons, an auto-loan will prove a wiser lesson in maintaining a loan. A bike lost may not be much of a loss.
It may send the wrong message in life if you cannot afford a toy finance it.
My parents never took loans for anything and taught me to save and then buy it. I have one had one loan for a vehicle for a year.
Pay cash.
My dad used to be that way, when I was a kid. He drove $500 beaters, but still had enough to buy a small boat to go crabbing in. He also rented a nice little house with a lawn, in an ok neighborhood.
We've both evolved into using credit for many things. I let the credit card companies literally pay me to use them. I've also chosen to take out long (60 months) auto loans, at the lowest possible interest rate. If I'm going to make the already terrible financial decision to buy a new car, why would I take money out of stocks and savings just to pay for a vehicle, when it can be had for 1-2%, and sometimes 0% financing?
As for the OP, it sounds like he already has a line of credit that is helping him out. It's revolving, which won't help as much as an auto loan, but I don't see a reason for taking a loan out on a toy. For social and financial reasons, an auto-loan will prove a wiser lesson in maintaining a loan. A bike lost may not be much of a loss.
Originally Posted By: Oil Changer
If he can't pay cash for such a miniscule expense, he shouldn't be buying it. His father should be teaching him about how bad paying interest is. No 18 y/o should be riding a motorcycle.
This. I rode Motorcycle but never allowed my son to ride. He doesn't now.
Yes he may go to war at 18..you know why?? 18 year olds are more suited for war. They are immortal, they don't know fear. And that's the exact reason they should not ride.
Do what you want. I know I made the right decision.
If he can't pay cash for such a miniscule expense, he shouldn't be buying it. His father should be teaching him about how bad paying interest is. No 18 y/o should be riding a motorcycle.
This. I rode Motorcycle but never allowed my son to ride. He doesn't now.
Yes he may go to war at 18..you know why?? 18 year olds are more suited for war. They are immortal, they don't know fear. And that's the exact reason they should not ride.
Do what you want. I know I made the right decision.
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If he makes enough money to cover all his exspences, can afford insurance, and any repair costs for the bike and his car if he has one, how much will he have left over at the end of the month for savings? Even with a little credit he may still need a co-signer for whatever the loan amount is. Who's gonna be the co- signer if he needs one? Kids and people in general take care of their things better, when they are responsible for the monthly payment and upkeep. Over having everything just handed to them. Let him chew on the fact that every month the will be a payment that needs to be made, to decide if he really wants to do that at this point in his life.,,
+1 and also, things happen that we have no control over and cost extra money. Does the 18 year old have a back up plan if he defaults or does DAD also sign (which I never did for my kids)?
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