Financed Motorcycle Insurance Woes

March 2, 2006 11:31 PM

I financed a used motorcycle and am faced with unexpected high insurance rates. What are my options?

I have had bikes in the past, but have paid cash for them. Same thing with all of my cars. I don't like paying interest if I can avoid it at all, but I had been very eager to ride the last couple of months (I'm sure the motorcyclists reading out there know the feeling) and didn't want to wait four months and miss spring riding weather just to have the $5,000 I needed saved to buy another bike, so I bit the bullet and went to a dealership last weekend. I got an '04 SV650s, which is great. With tax, title, license, and a 24-month warranty it came out to around $6,500. I know that is more than I would pay for one private party, but it was worth it to me to be able to ride now.

Here's the problem. I am used to paying less than $30/month for liability insurance. The state I'm in (Arizona) is a title-holding state and I found out after the purchase that I have to have comprehensive and collision coverage if there is a lien on the title. This raises my rate to about $330 /month (I'm young). I have Progressive right now and have gotten higher quotes from a couple of other providers.

Even if I live lean and put my money into paying off the loan in 8 or 9 months (luckily Arizona also has no prepayment penalties) I'm left with an excess insurance payment of at least $2,400 more than I was expecting.

So basically.... overpaying and paying interest in order to ride now rather than in 4 months (and also get an all-inclusive 2 year warranty) was worth it to me... overpaying, paying interest, and overpaying for insurance is definitely not worth it for me.

This leads me to the actual question: What are my options? I initialled a document at purchase that said, "Purchaser understands that there is no right of rescission; no option for return or exhange, and the purchase of title/or registered vehicle(s) has been made." How binding is this and do you think the dealer would offer any flexibility? If so, how should I approach them?

If not, suggestions for alternate providers that might be cheaper would be great. I don't care if they are no-names and could possibly have horrible service, as long as the State of Arizona and my lienholder finds them acceptable. I am a responsible driver/rider and am not expecting any mishaps. I am 20, male, and have one ticket on my record from march of '04 for doing 48 in a 35 (watch out for the camera vans they drive up off the side of the road in Tempe, they trigger at 10 over and Tempe PD thinks it's a good idea to park them immediately after a 45 transitions to a 35 on eastbound lanes early in the morning).

posted by Bondrake to travel & transportation (25 comments total)

Just as a minor point of curiosity I may in the future post another question regarding my last comment about the mailed-in speeding ticket I received a couple of years ago. I have heard that in AZ you can toss these without any repercussions, as they can't fine you/charge you without a guarantee that you have received the ticket... which requires an officer hand-delivering the ticket. I am just curious how true that is (I have also heard others say that it isn't a good idea to do this because you may not immediately see any repercussions but eventually your license may get suspended for it). If anyone wants to chime in about that (after first addressing my pressing issue) it may save having to do so.
posted by Bondrake at 11:41 PM on March 2, 2006

A quick google suggests there is no buyer's remorse in Arizona, which means "You bought it when you signed".
If you haven't ridden it, you might see if the dealer will buy it back for what you paid, plus a surcharge. They'd have to sell it as used, so you're going to pay for the depreciation.

As far as real cheap insurance, try the insurance storefront nearest to your local DMV (in the same strip mall if possible), they usually get all the dredges, and can find you something that covers the bare minimum required by law.
posted by madajb at 11:47 PM on March 2, 2006

I took a motorcycle safety class (in Houston) and received 25 percent off my insurance. Also, studies show these classs, which take one weekend to complete, are equal to two full years of riding experience.
posted by Brittanie at 11:58 PM on March 2, 2006

It is an '04, so purchased used already. A new SV650S retails for as much as I paid with everything including the extended warranty on mine.

I have already put a few hundred miles on it (I reallly love riding, last summer I put about 4,000 miles on a bike in 2 months). I would be willing to pay a surcharge even as much as $500. Does this seem reasonable? Is there anyone out there who has done something similar?
posted by Bondrake at 12:04 AM on March 3, 2006

I have read Proficient Motorcycling (among other books) and have had an amateur-pro racer who knows some of the instructors at TEAM Arizona (the big MSF school here) test my riding skills and offer me tips, so I have not been concerned with taking an MSF course for safety concerns.

Assuming a 10% discount (which is what most providers seem to give here) from my current best insurance rate I would see return on investment for a $245 MSF course at 8 months of insurance payments, so I have considered and will likely do this. However, I am looking for a much more drastic cost reduction.
posted by Bondrake at 12:14 AM on March 3, 2006

Dude. That sucks. My car has a lien on it as well (18.7% APR. Look who's eating it.) and so I'm all about the comprehensive up in here. Through Progressive, too, since they do seem to be the cheapest.

I think the only real recourse you have here is to talk to the dealership and see what they say, and maybe push a little bit. Explain the situation, and see if you can speak to someone nice. They have every right, as I understand it, to say tough luck.

Other than that, really, really shop around insurance-style. Check GEICO, Essurance and All State and see what you can get. Comprehensive is murder and it doesn't help that we have to pay ridiculously high uninsured driver premium's as well, what with our high proximity to the border.

Sorry, man.
posted by disillusioned at 1:01 AM on March 3, 2006

Since the extended warranty is pure profit for the dealer, you might try seeing if they'll buy it back for what you paid minus the price of the warranty.
posted by madajb at 1:08 AM on March 3, 2006

Data point: California, 25 yo male, colorful driving record, new CBR600F4i, not financed, comprehensive coverage, $65/month.

I previously insured a '99 SV650 with the same company. Liability only was about $25/month.

Bike-line Markel Insurance
posted by ryanrs at 1:32 AM on March 3, 2006

ryanrs, I was quoted at $310/month for comprehensive on my bike from there. You generally enter a much lower risk bracket at 25, so that's maybe where the big discrepancy is. Thanks for the suggestion though. I almost got an '05 CBR600F4i this weekend, now I'm scared to know what the insurance would have been.

madajb, I was thinking the same thing. I may speak with them in this regard. I'm hoping to hear from someone who has done/tried this or something similar.
posted by Bondrake at 2:25 AM on March 3, 2006

Hm, can you take out a bank loan to pay off the bike sooner, if the rates would be lower and you're a good loan-candidate that might be a good avenue of exploration..
posted by By The Grace of God at 3:15 AM on March 3, 2006

Am I right in assuming that since you have comprehensive coverage on your bike, you'd be covered if anything unfortunate were to happen to your bike? If I'm right, I certainly see some possibilities there. I think By The Grace of God has the best idea; see if you can re-finance your bike in such a way that you're not required to have comprehensive coverage.
posted by insomnus at 3:42 AM on March 3, 2006

I was 23 when I bought the SV650.
posted by ryanrs at 4:07 AM on March 3, 2006

Are you just driving the bike or do you have a car too? You can get a discount if it is your second vehicle. Also here in Wisconsin where the motorcycle driving season for non-diehard riders is much shorter than AZ, I typically get April through October coverage which lightens the load. Even there you could presumably get insurance for half the year as long as you had another vehicle to use and were ok using it only part of the time. As long as you are a consistently good rider, the cost will go down, eventually....
posted by JJ86 at 5:57 AM on March 3, 2006

It's a small enough total amount that you might be able to flip the finance charge onto a credit card. You call your credit card companies, fight tooth and nail to get a 2.99% or 3.99% "fixed for the life of the loan" offer. These come with checks. Pay off the bank with one of these checks. Now you're saving money on insurance and on the loan payments... Sounds like a win win. If you've got good credit to be able to get this offer in the first place.

Being young sucks.
posted by zpousman at 6:58 AM on March 3, 2006

Hm, can you take out a bank loan to pay off the bike sooner, if the rates would be lower and you're a good loan-candidate that might be a good avenue of exploration..

Even a credit card might be worth it. Probably double the rates but it won't count as a lien.
posted by smackfu at 6:58 AM on March 3, 2006

Geez - I had this same problem when I owned a number of Yamahas and CBRs.

Liability on the bike is cheap - comprehensive and collision are what kill you on costs. So - I'd recommend a couple of options, with one caveat - you must, must, must carry theft protection if at all possible. I had one bike financed that did not require full coverage ('94 FZR 600) and it was stolen. I spent 4 years paying it off. God, how that sucked.

Check out Dairyland and, if you can stomach it, Geico. You might get good rates that way. Your credit score affects your rates on insurance - at least it does with Progressive. You might find another carrier.

Another option you have is to sell the bike, get something else that is not so high on the insurance. Some Ducatis are lower, Triumphs tend to be lower, a lot of BMWs are lower, too - tend to be purchased (and not wrecked) by more mature riders as opposed to squids on R1's.

If you own a house, using the same insurance company for car, house, bike will help a lot with all three.

Finally, if you're real, real, real careful, you can find a finance company to re-fi the bike who doesn't require anything but liability coverage - call a couple of local dealers - they all have at least one fin. co. who will do this.

But be warned - if you crash out, you're not covered. If you lose the bike in a theft, you're not covered. I would only advise this as a last straw if it means you're going to lose the bike.
posted by TeamBilly at 7:05 AM on March 3, 2006

The problem is that you've financed the bike, so until it's paid off you have to carry comprehensive insurance. Bikes are easy to steal, so therefore the insurance is expensive. Most credit unions will finance motorcycle purchases, even used ones, but you'll still need the insurance. My advice is to either raise your deductible as high as you can possibly cover, or sell the bike.
posted by electroboy at 7:54 AM on March 3, 2006

...If you own a house, using the same insurance company for car, house, bike will help a lot with all three. ...

This is key. Many major insurers will qote you outrageous rates on bike policies alone, but much more reasonable rates when you have car and house/renters insurance with them.

I live in NJ and pay State Farm for renters, auto and motorcycle insurance. I pay $~250 *A YEAR* for comp/liability for an '00 SV650S. However, I'm also 15 years older and have had a clean license for at least the past 5 years.

Also, any chance you've served in the military, or have a family member who did? If so, you may be eligible for insurance through USAA. They had extremely reasonable rates when I insured with them in the past.
posted by de void at 8:05 AM on March 3, 2006

Another option you have is to sell the bike, get something else that is not so high on the insurance. Some Ducatis are lower, Triumphs tend to be lower, a lot of BMWs are lower, too - tend to be purchased (and not wrecked) by more mature riders as opposed to squids on R1's.

Yeah. I was going to suggest going for a lower CC engine to put you in a different risk area or whatever. Since you took the plunge to finance, I assume you've fallen in love with the SV, and with good reason. But: would you still be happy just riding a less sexy bike? Like an EX500 (considered a "learner bike" by some sport riders) or a Vulcan 500 (ditto, but a low HP cruiser)? IANA insurance agent, but I do ride and I feel your pain. You young fellers and your sportbikes are an insurance company's nightmare ;-) Good luck.
posted by scratch at 8:55 AM on March 3, 2006

Take out a personal loan from your bank (which is not secured against the bike, so there is no lien on the bike). The interest rate will be higher, like 10 or 11%. Pay off the bike loan. Problem solved.
posted by knave at 9:56 AM on March 3, 2006

FYI for all who suggested selling the bike: You cannot sell a bike if you don't have the title. As I stated, Arizona is a title-holding state. This means the lienholder keeps the title until the lien is satisfied. The only exception to this is trading the bike in to a dealer. Then the remainder of your balance is generally refinanced under your new loan terms. Regardless, I would still be stuck with comprehensive and collision coverage to satisfy my new lienholder's requirements.

For those who suggested a home equity loan or HELOC: I do not own a house, so this is not an option (however it would be a great one if I did).

For those who suggested a personal loan: It seems that the minimum amount I may have financed in AZ in this manner is $10K. Is this true? Do I have other options? (perhaps a loan through a credit union rather than a bank)

Also, it is generally much easier to get an auto loan or home equity loan than a personal loan BECAUSE the financial institution can put a lien on your property to protect them against non-payment on your part. I only have a year of established credit and my average credit score was 730 immediately prior to getting an auto loan. I know having a revolving payment loan will put a significant ding in my score until I pay it off. Do I even have a chance of getting a personal loan?

For those who suggested using credit cards/working with credit companies for a loan: This sounds like a good option. I may try calling my card companies.

Thanks for all the suggestions and insight!
posted by Bondrake at 5:24 PM on March 3, 2006

I just spoke with the dealership and it turns out my lender (HSBC) does not require anything more than liability coverage! I will be contacting Progressive to have my policy changed. Thanks TeamBilly for the tip regarding some companies not requiring comprehensive and collision coverage, that was the first thing I asked them.
posted by Bondrake at 5:51 PM on March 3, 2006

Bondrake, from my previous bank and current credit union, I've gotten various personal loans ranging from $3000 to $9000. The amount has never been an issue.
posted by knave at 6:58 PM on March 3, 2006

FYI for all who suggested selling the bike: You cannot sell a bike if you don't have the title. As I stated, Arizona is a title-holding state. This means the lienholder keeps the title until the lien is satisfied. The only exception to this is trading the bike in to a dealer.

Wrong, sir. No disrespect, but this is incorrect. All that happens is that the note is closed/signed whatever at the lienholder's establishment, who handles transfer of title. Little known fact - most dealers (of cars or motorcycles) don't actually own the merchandise - the banks do. When you buy a bike from them, their bank handles title transfer to your bank. That's the title fee you pay on the bike.

This is quite common.
posted by TeamBilly at 8:26 PM on March 3, 2006

Oh, and ferchrissakes try and carry theft coverage. SV's are ripe for theft simply as parts for racebikes - lots of guys switched from HawkGTs to SVs when they came out for track use.
posted by TeamBilly at 8:27 PM on March 3, 2006