Do you finance your sled or pay up front?
- Thread starter BigMan
- Start date
Sounds like the debt snowball plan that Dave Ramsey teaches.
I should note that the last couple of my sleds were financed. I sold my sled earlier this year and will be without one for the first time in 22 years. I too get stressed out about debt and my goal this year was to wipe everything out except for my mortgage. I will achieve that in the very near future.
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Here is my take, being almost 49 years on this planet.....
If you are a young guy just getting out of school, have a decent job, can afford to pay 400-500 bucks a month to finance, then finance. You need to build up credit and your credit score, and this is a good way to do it, especially if the interest rate is near zero.
If you can afford the sled at any age, and you have other higher interest debts, pay the lower interest sled purchase off after you have paid on your higher debts first.
There is merit in both approaches (Paying cash/financing)
It really depends on where you are in life......
Be smart about how you incur debt. for you young guys starting out in life, your credit score determines so much, including who will hire you, and what interest rates you pay in the future.
I have a 829 credit score, and a lifetime of making reasonable choices and forgoing things you cannot afford, got me to that score.
Just look at yourself in the mirror and ask yourself, "can I really afford this _____________, or this_____________?"
If you are a young guy just getting out of school, have a decent job, can afford to pay 400-500 bucks a month to finance, then finance. You need to build up credit and your credit score, and this is a good way to do it, especially if the interest rate is near zero.
If you can afford the sled at any age, and you have other higher interest debts, pay the lower interest sled purchase off after you have paid on your higher debts first.
There is merit in both approaches (Paying cash/financing)
It really depends on where you are in life......
Be smart about how you incur debt. for you young guys starting out in life, your credit score determines so much, including who will hire you, and what interest rates you pay in the future.
I have a 829 credit score, and a lifetime of making reasonable choices and forgoing things you cannot afford, got me to that score.
Just look at yourself in the mirror and ask yourself, "can I really afford this _____________, or this_____________?"
Bro, I found the sled i wanted
then pulled the trigger, I bought it right in September, but didn't care what it cost, got the banker, got the loan, I put a $500 deposit on the sled before i had the finances, i knew that didn't matter. Now I',m happier than a pup with 2 peters. YEEHA
then pulled the trigger, I bought it right in September, but didn't care what it cost, got the banker, got the loan, I put a $500 deposit on the sled before i had the finances, i knew that didn't matter. Now I',m happier than a pup with 2 peters. YEEHA
my 2 cents
This is my first (and probably last) year I have ever purchased a new sled. They depreciate so fast that if the finances are an issue for you you need to be riding year old or older stuff. If you can't or are unwilling to afford the several thousand dollars it will cost you in interest by financing or lost opportunity cost by paying cash and not having the money to invest, and the loss in value then you need to look at other options.
You need to compare prices always. Someone, somewhere is paying something for that 0% interest loan. Polaris is paying some fee to Sheffield Financial so that Sheffield will write those 0% interest loans. I assume Polaris is counting on the fact that more people will buy sleds because of the attractive offer and Sheffield Financial is counting on some percentage of those loans not getting paid off before the higher interest rate kicks in. The credit card companies are charging an upfront transaction fee (read interest charge) of 2% or 3% so there is no such thing as a 0% loan from a credit card.
There are two ways to make money selling big ticket items such as snowmobiles and trucks. You can make money on the front end - the sale - and you can make money on the back end - the financing. Car dealers would much prefer you to finance with them than pay cash because they get the opportunity to make money on the deal twice.
That checking account at the Credit Union is probably paying .3% interest. Banks and Credit Unions make money on the spread between what they collect in interest on loans and what they pay in interest on savings and checking accounts so there is no way the interest rate received on a checking account is going to be higher than the interest rate paid on a loan. The entire financial industry is a lot like gambling on football. It's all about the point spread.
Oh and yes I am taking the 0% even though I could pay cash. I'm betting that I can pay it off before the higher interest rate kicks in and Polaris doesn't give me a price break for paying cash so I will use that extra money to pay down my mortgage.
This is my first (and probably last) year I have ever purchased a new sled. They depreciate so fast that if the finances are an issue for you you need to be riding year old or older stuff. If you can't or are unwilling to afford the several thousand dollars it will cost you in interest by financing or lost opportunity cost by paying cash and not having the money to invest, and the loss in value then you need to look at other options.
You need to compare prices always. Someone, somewhere is paying something for that 0% interest loan. Polaris is paying some fee to Sheffield Financial so that Sheffield will write those 0% interest loans. I assume Polaris is counting on the fact that more people will buy sleds because of the attractive offer and Sheffield Financial is counting on some percentage of those loans not getting paid off before the higher interest rate kicks in. The credit card companies are charging an upfront transaction fee (read interest charge) of 2% or 3% so there is no such thing as a 0% loan from a credit card.
There are two ways to make money selling big ticket items such as snowmobiles and trucks. You can make money on the front end - the sale - and you can make money on the back end - the financing. Car dealers would much prefer you to finance with them than pay cash because they get the opportunity to make money on the deal twice.
That checking account at the Credit Union is probably paying .3% interest. Banks and Credit Unions make money on the spread between what they collect in interest on loans and what they pay in interest on savings and checking accounts so there is no way the interest rate received on a checking account is going to be higher than the interest rate paid on a loan. The entire financial industry is a lot like gambling on football. It's all about the point spread.
Oh and yes I am taking the 0% even though I could pay cash. I'm betting that I can pay it off before the higher interest rate kicks in and Polaris doesn't give me a price break for paying cash so I will use that extra money to pay down my mortgage.
Sometimes it is an either or situation. But I bought my Duramax at the end of 2011 (2011 model) and got both incentives. So I didn't sacrifice an additional rebate or incentive.
As for my 2013 Polaris, I'm not sure there was anything else I could have gotten instead of 0% financing. I know you can sacrifice part of your warranty to get parts/accessories or pay less on the sled.
All good points made here.
Not to be a credit union fanboy, but the checking account rate is indeed 3.00% and not 0.3%. The $ to pay for that good rate is from transaction fees paid to the bank by the merchants when a check card is run as credit. Sure that can drive up the price of goods but I'm not going to feel guilty about it. Over $15k the rate drops to 0.10% because the money doesn't move enough to generate adequate transaction fees to pay 3% on such a balance. I was pretty surprised at this model.
Thousands to finance though? I'm coming up with a few hundred on a three year loan with good interest rates. (8K @ 2.65% is $331.12 more than just paying cash).
Not to be a credit union fanboy, but the checking account rate is indeed 3.00% and not 0.3%. The $ to pay for that good rate is from transaction fees paid to the bank by the merchants when a check card is run as credit. Sure that can drive up the price of goods but I'm not going to feel guilty about it. Over $15k the rate drops to 0.10% because the money doesn't move enough to generate adequate transaction fees to pay 3% on such a balance. I was pretty surprised at this model.
Thousands to finance though? I'm coming up with a few hundred on a three year loan with good interest rates. (8K @ 2.65% is $331.12 more than just paying cash).
All good points. I do know this. Companies do not work for free. I don't work for free. It is hard to make a living working for free. This is why 0% financing is very seldom, if ever free. I also bet part of the payment has a service fee in it to process the payment and the paper work. May want to ask the difference in price if I pay cash. I could have got 0% on my Pro but choose not to. I took the price of the sled and took a 4 year warranty which I already cashed in on for brand new pistons and rings and bellows. Because it was my second year I had to pay entire $50 for the entire job. The $50 covers the deductable after year 1.
I don't care if you financed your sled and your truck. I have one vehicle payment in our household right now as well, for now. Working on paying that off. But don't kid yourselves that banks work for free because I have not found one yet that will.
I don't care if you financed your sled and your truck. I have one vehicle payment in our household right now as well, for now. Working on paying that off. But don't kid yourselves that banks work for free because I have not found one yet that will.
Aside from the 0% stuff, 'cause that doesnt really count. Who wouldn't finance at 0% rather than pay the lump up front (assuming the purchase price is apples to apples, cash or credit with no caveats)?
Talking loans that require significant interest paid vs cash, I will finance short term if i find a can't pass up deal on something that I don't have cash for at the moment. Not the usual situation here though, as I get about 1/2 of my income in one lump sum annually, so sometimes need up to 12mo to round up the cash.
Typical purchases are cash for everything. Vehicles and toys, but I'm fortuante enough to do that.
I personally would MUCH rather see people financing sleds every day of the week compared to those financing stupid chit like rent to own appliances and furniture. If you can't afford a new couch or washing machine, that's what Craigslist is for!
When talking sleds specifically, while it may not be the very best financial decision to take a loan out on something you plan on going and hucking off a cornice or barrel rolling down a hill, I agree with the "you only live once" mentality to a point. If you pick a toy/hobby and it costs you a little extra to be able to enjoy that hobby then who cares, as long as you're responsible about it?
Now if you're the neighbor (everybody has one), who has a "new" something in his driveway every other month just to keep up with the Joneses.....and the Smiths........and the Johnsons...........then you're an idiot.
Besides, if everyone ONLY bought a new sled if they could pay cash, there would be FAR fewer used sleds to buy and my used sleds (I don't buy new) would be $5000 Indy wedge 440s, not $7500 ProRMK's that have only been out of the garage twice!
Support the industry. If you like new stuff and can reasonably make the payment, go buy a sled!
Think about how small the snowmachine industry is. If everyone who rides could get just ONE more person to go buy a new sled (presumably the majority of them financed), it would double the size of the industry and maybe Poo would start backing their warranties and Cat would put enough R&D $ into their clutches to keep them on the snow!
Talking loans that require significant interest paid vs cash, I will finance short term if i find a can't pass up deal on something that I don't have cash for at the moment. Not the usual situation here though, as I get about 1/2 of my income in one lump sum annually, so sometimes need up to 12mo to round up the cash.
Typical purchases are cash for everything. Vehicles and toys, but I'm fortuante enough to do that.
I personally would MUCH rather see people financing sleds every day of the week compared to those financing stupid chit like rent to own appliances and furniture. If you can't afford a new couch or washing machine, that's what Craigslist is for!
When talking sleds specifically, while it may not be the very best financial decision to take a loan out on something you plan on going and hucking off a cornice or barrel rolling down a hill, I agree with the "you only live once" mentality to a point. If you pick a toy/hobby and it costs you a little extra to be able to enjoy that hobby then who cares, as long as you're responsible about it?
Now if you're the neighbor (everybody has one), who has a "new" something in his driveway every other month just to keep up with the Joneses.....and the Smiths........and the Johnsons...........then you're an idiot.
Besides, if everyone ONLY bought a new sled if they could pay cash, there would be FAR fewer used sleds to buy and my used sleds (I don't buy new) would be $5000 Indy wedge 440s, not $7500 ProRMK's that have only been out of the garage twice!
Support the industry. If you like new stuff and can reasonably make the payment, go buy a sled!
Think about how small the snowmachine industry is. If everyone who rides could get just ONE more person to go buy a new sled (presumably the majority of them financed), it would double the size of the industry and maybe Poo would start backing their warranties and Cat would put enough R&D $ into their clutches to keep them on the snow!
That's it, I'm calling my dealer tomorrow to get one ordered! The exact post I've been waiting for! Thanx for clearing my conscious so I can spend the money! I hope your post works as well on the wife! LOL
with the prices they are charging now if it wasn't for financing there would be no snowmobile industry. sometimes you just have to sit back and wonder if you're getting enough value for what you are paying. 13k for a sled that will be worth 8k in a year is just a little too much. rich guys won't be able to keep this sport alive forever, if they want it to grow all manufacturers need to look at what doo has done with the sport. have watched the crowds dwindle more and more every season...
Heres my opinion to what you just wrote...
Look at mountain bikes, youll spend close to the same amount as a new dirtbike for what is basically a dirtbike without an engine and MUCH weaker parts and no electrical system. Of course everyone wants stuff to be cheaper, but I dont think they are overpriced, even being that I cant afford a new sled... If you ever think anything is expensive simply look at mountain bikes and remember, it could always be triple the price of what it should be.
Ps. In Canada a new sled goes for 15k. And 2011 M8s for example currently in my area are going for $7-8000... And selling like flies.
Assuming I have 10k cash saved up to buy a NEW sled. (yes I know sleds cost more, but this is an example and easy number to understand)
By the numbers:
10k invested in the market or mutual funds (100 year average rate of return = 8.5%) without adding more money to it (not using compound interest).
ROI = +$884. (amount you make on investment over the year)
10K financed for sled at 2.9% 6 year term.
Monthly payment = -$152.
Year total = -$1824 (amount you paid over the year)
Actual out of pocket expense before sale of used sled (1824-884) = $940
Sled value at the end of the year (sled deprecation 25% of original value)
-$2500 = $7500 (what sled is worth/sold for after 1 year)
Paying cash it would cost you $2500 to ride for the year.
By financing (at 2.9%) AND investing instead of paying cash you pay ($2500-$884) = $1616 to ride for the year. (number would be $200 lower with 0% financing)
But keep telling yourself that paying cash is cheaper...
By the numbers:
10k invested in the market or mutual funds (100 year average rate of return = 8.5%) without adding more money to it (not using compound interest).
ROI = +$884. (amount you make on investment over the year)
10K financed for sled at 2.9% 6 year term.
Monthly payment = -$152.
Year total = -$1824 (amount you paid over the year)
Actual out of pocket expense before sale of used sled (1824-884) = $940
Sled value at the end of the year (sled deprecation 25% of original value)
-$2500 = $7500 (what sled is worth/sold for after 1 year)
Paying cash it would cost you $2500 to ride for the year.
By financing (at 2.9%) AND investing instead of paying cash you pay ($2500-$884) = $1616 to ride for the year. (number would be $200 lower with 0% financing)
But keep telling yourself that paying cash is cheaper...
Regardless of how I pay for it you are right. I'm not rich but I love the sport so much that I want whatever is new. I can't justify this very well (just ask my wife) but I tend to do it anyway.
J
Jaynelson
Well-known member
We've had these threads before and all I'll say is this;
On the internet, everyone is a big wheel and everyone pays caaaaash son.
In real life (me being in the finance industry), 80-90% of recreational units (bikes, sleds, quads, boats, etc) that go out the door are financed in one form or another. New or used.
Lots of people "paid cash" in that they didn't finance AT the dealership. Home owner lines of credit have been sooo cheap for years now that everyone "pays cash" with those......lol
I paid honest cash for my last sled, BUT I sold my previous sled for 2/3's of the new one's price. The key at the time I had minimal expenses....now, however, I have a spouse, house, renovations, dog, etc, etc, and running out and buying a new sled for cash would not be in the cards. As others are saying, even if you have the cash, it's not always the best choice once you compare interest rates lending vs borrowing.
If you make an average wage and want a 400K house, 40K truck, 20K car, and all the toys (ie many people on this board), best believe you owe on lots of it. It's the way of the world these days. Internet talk is very misleading on this topic.
On the internet, everyone is a big wheel and everyone pays caaaaash son.
In real life (me being in the finance industry), 80-90% of recreational units (bikes, sleds, quads, boats, etc) that go out the door are financed in one form or another. New or used.
Lots of people "paid cash" in that they didn't finance AT the dealership. Home owner lines of credit have been sooo cheap for years now that everyone "pays cash" with those......lol
I paid honest cash for my last sled, BUT I sold my previous sled for 2/3's of the new one's price. The key at the time I had minimal expenses....now, however, I have a spouse, house, renovations, dog, etc, etc, and running out and buying a new sled for cash would not be in the cards. As others are saying, even if you have the cash, it's not always the best choice once you compare interest rates lending vs borrowing.
If you make an average wage and want a 400K house, 40K truck, 20K car, and all the toys (ie many people on this board), best believe you owe on lots of it. It's the way of the world these days. Internet talk is very misleading on this topic.
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I guess I'm too much of a sled head. If I loose my job and still owe on my babies, they are gone. Paying cash I still have them. Can't afford to ride at that time but at least I still have em
Not a risk I'm willing to take
Not a risk I'm willing to take
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In my world, if I lose my job and I have payed off toys...guess what the wife is selling.....
If you have a wife your toys are not safe...sorry to bring the bad newsSimilar threads
