You guys are tough. LOL

 

Ok, this is how it works. The 4 Square is for financed stuff, and they want you to finance, so we would typically turn away cash buyers if sales were good. (no kidding).

For the explanation, let's say the the motorcycle is $20,000. Square 1

We ask you how much can you put down. Square 2

We ask how much are you comfortable paying per month? Square 3

Interest rate of loan. Square 4

Only ones that really matter to the dealer are Square 2 and 4.

Square 3 is the one where we get you. Guy will say, "I am willing to pay $400.00 a month, but I 'aint buying that bike unless you sell it to for $18,000" I say "Sir, I am going to have to talk to my manager, That's just too low of an offer!" He smiles over at his wife, as he's got me under his control!

I go to the backroom, and my manager is watching Jerry Springer, and I go back there, grab a cup of coffee and watch drama for a little while (typically 6-8 minutes, if we got you).

I come back out and tell the guy that the manager agreed, but it took a lot of work. Only thing we have to change is Square 4 (the interest on the loan) Let's say it's 5% so I change it to 7% and tack on a few years - the guy doesn't bat an eye, he's getting the bike for $18,000 for only $400 a month! He had me quaking in my boots!

At the end of the day, we get $30,000 for the bike.

I oversimplified it, and didn't do the math, but that is basically how it works. We turned away many cash buyers because the money wasn't enough.

I did this for about 3 months before I quit. It was a dirty job. When I quit, I was the second best salesman in the dealership. My angle was to play stupid and let the guy think he was outsmarting me. I always get a laugh when someone on this forum says that they had the dealer in the palm of their hand.

 

I got a funny dealer story. One of dealers there was named Drew. He was a skinny fellow.

A couple walk in, and somehow the conversation turns to long distance running. Drew tells them that he is into marathons too. He makes the sale (used Sportster).

After they left (I was into running) I said "Drew, I didn't know that you were in to running" He looked back at me with a super confused look, and said "What?" Then it dawned on me, he had no recollection of lying to the couple, his bullshit ran on auto-pilot.

 

I am going to guess that you either
1) Did not do your homework on what you should be paying before you went to the dealership to make your purchase, and ended up paying WAY too much.. or
2) You did not read the paperwork that you signed off on at the time of the sale, and believed what someone told you vs what you agreed to in writing.

Any bets on which one it was?

(the honesty of the salesman should never be a factor, it is a business transaction)

 

Another one. It's a used bike, and this guy walks in with cash. I'm thinking this is an easy sale, so I say Ok. Now, no salesman can make ANY decisions, you are completely controlled by the money guys.

I go to my manager, and say I've got the sale. He (manager) liked me so he didn't get too mad, but told me to go back out and tell him it's not for sale, we discovered a problem or something (don't recall). I turn the guy away. I asked the manager why, and he said that we don't make enough money on the cash sales, especially on used bikes. They would pay absolutely peanuts on trade ins, so it was a pure greed thing. They made so much more money on used bikes, they wanted to finance them to get even more money. I genuinely felt bad for the guy we ran off.

A few days later, a local DJ wants the bike. They run a credit/financial check on the guy, and find out just what a DJ's salary is. It's was so low, even I was shocked. The manager put some ridiculous numbers on the 4 Square (like 4X of what current "bad credit" interest was). I was about to go back out with the sheet, and my manager stopped me in the hall, took the paperwork back, and said "We can't sell this guy a bike at any cost, he's too broke, tell him we can't sell the bike." Poor guy.

 

I might beg to differ sir. There are others here that fully understand financing.

In your example, if the price of the unit is $18K - you may have extended the term and increased the interest rate to get to the $400 payment. If the loan goes to maturity, the delaership is paid on the difference between the contract rate and the buy rate - this would give you a little extra income.

However, should there be no prepayment clause in the contract, the buy could pay this off as soon as the contract starts. The results would be - he would pay the $18K and, that would be the price of the bike.

When I buy my vehicles, I do something similar. GM, as an example may provide a $2500 rebate if you finance with them. I say sure, finance with them for a min of 6 months, pay off the balance and have a bit of extra money.

If the interest rate is say, 0% for 48 months, instead of paying cash, I out the money in a mo0ney market account, have them take the payments out each month and when done, I get to keep the eared interest.

 

The guy that's hostage to the 4 Square ain't paying anything off early. The dealership knows exactly what they are doing.

 

I am with you, if I don't get the deal I want, I walk. You have to be reasonable, the dealer is not stupid and will not take a bad deal.
According to the HD SEC fillings, HD is making between 22-35% on each motorcycle that they sell to the dealer. The dealer profit on a motorcycle at MSRP is not as high. They make some money, but not the 20% folks are claiming. The money for the dealer is in accessories and service.
Usually, the bank will pay the dealer if the loan lasts at least 6 months; the loan does not have to mature.
The bank will tell the dealer what the banks interest rate is for the loan. The dealer may mark this up. The term you want is "buy rate". You want to see the "buy rate" the bank gave the dealer. If the dealer refuses to show this, go elsewhere.
With my first Harley, I was surprised when the dealer tried to put a finance charge of ~$3500 into the price. Usually, the dealer gets a kickback on the loan. I opted to pay cash on that one. Had not seen that one before.
Typically, I will take a loan to negotiate a better deal, as the dealer is getting that bank kickback. I will check the terms for a pre payment penalty. There should not be one, but it still pays to check the paperwork.
I then pay the bank for the motorcycle/car within a week or two of the purchase. Typically, a better deal than paying wth cash at the dealer.

That is how the smart money buys vehicles, if it is worth your time to do it.

 

I've read most of this and as always, it boils down to there are US and THEM. If you are (US) informed, have the money, and understand financing, you should never be taken advantage of. However, I would bet the (THEM) % of the others is around 80%-85%.
It takes years to become (US) and the world is full of (THEM) who haven't gained the experience yet to become (US), and other who never will.
Yes, there is a time to finance, using their money and a time to pay cash, it all depends on rates of return.
Sadly, the finance world is like Vultures taking advantage of the weak and not concerned with the healthy and thriving. Like PayDay loans and Pawn shops, anyone believe they are there to help people. The less money you need, the more money is available at fair rates.
30 years ago I played the Balance transfer game, carefully using THEIR money until they started shifting charges to the end with the crazy rate, but John Q doesn't have the mentality or discipline to avoid that bad ending.
Most of us have been through it to some extent and several have learned the life lessons.

 

Smart money does not buy new motorcycles. Fortunately, most of us have worked and been smart with money all of our lives so we can spend dumb money on bikes. Good comments though.