Is buying a powerful motorcycle on loan is a good idea?

Question

I am thinking of purchasing a Ducati motorcycle. Its price, including taxes, is about $22K.

I don’t own a car so I have no car payments. I had a $50k education loan which I paid off. I have about $10k of credit card debt which I expect to pay off in 3 more months, at which time I will be debt free. Is it a good idea to finance this purchase and take on $300 to $400 per month in payments?

I am worried about the crazy insurance costs for this Ducati bike. When I looked up the cost on the Progressive web site, it estimated that basic coverage would be $12k per year. I think that this is insane since I could buy a motorbike every year for that price!!!

I am 25. I live in SoCal and I don’t have a driving history. If I decide to buy this motorcycle, how much of a down payment should I make ?

I'd appreciate some feedback. Thank you.

Answer 1

You have two different decisions: whether to purchase the motorcycle in the first place (which also requires insuring it), and if so, how to finance the purchase.

The motorcycle you describe sounds like a luxury item and there are probably much less expensive ways of meeting your transportation needs. In particular, the insurance estimate is telling you that the combination of your driving (in)experience and the characteristics of this vehicle is (perceived to be) quite dangerous. (You mention that the insurance cost seems excessive, but remember it is not just for damage to your own vehicle, but for liability for damage and injury to others.)

How well you can afford it should be evaluated in relation to your income and savings (having $10k credit card debt already is not a good sign). If you are successful in paying off your debt and building savings, it might be your choice to splurge on this motorcycle. What kind of loan to get and what down payment to make are relatively minor issues compared to whether you truly want to spend $22k (plus interest) on this. Do not be fooled by thinking only of the monthly payment -- think of what else you could do with $22k.

Answer 2

My answer: No.

Other than when it makes sense for investment reasons, do not borrow for things that are not necessities. This bike clearly is not a necessity.

Answer 3

This motorbike is both expensive and very powerful. Very powerful means very dangerous both for the driver and anyone else. That's reflected in the insurance cost, $12,000 per year means that the insurance expects you to cause $11,000 a year in damages to yourself and others that they need to pay for.

If you have no or little experience driving motorbikes, I would seriously recommend starting with a bike that is a lot less powerful and a lot cheaper. You can only enjoy the benefits of the more expensive motorbike once you have plenty of experience. And you don't know if you will actually enjoy riding a motorbike. Much better to spend $5,000 on something that you might or might not enjoy than $22,000. Wait spending the big money until you are sure it's what you really want and until you can handle that bike.

Answer 4

Answer: impossible to say. What's your income? $1k a month or $100k per month?

That being said, I'll place my bets that you are making a terrible mistake. If you mention a $50k debt as if that's a problem, then you are probably not pulling in enough to make this a smart decision.

Better idea: buy a used Ninja 250, a Rebel 250, a GZ250 or a GS500 for $1000-$1500, and ride it for a season. Insurance is cheap, gas is cheap, maintenance is DIY or cheap, and you are statistically more likely to still be alive in a year.

Creds: I have owned around 15 motorcycles over the years. When I sell, I make $100-$1000 per bike. Currently driving an '82 Yamaha Seca XJ750, purchased in bad shape for $300.

Yes, my bike is less than a single month of payments for some sport riders.