Despite “aggressive” first-quarter finance promotions, Freedom Euro Cycle customers are choosing rebates instead of low APRs, Owner and Operator Chris Clovis told Powersports Finance.
The Las Vegas-based dealership has noticed that the three OEMs whose motorcycles it sells — BMW Motorrad, Piaggio, and Triumph — are offering finance promotions with lower interest rates than last year as they try to spur sales in the off-season and move remaining 2018 inventory, Clovis said. For example, Triumph and Piaggio’s Moto Guzzi brand have offers of 3.99% and 1.99% rates, respectively.
In lieu of the low APRs, both are also offering $1,000 in “Customer Cash” (or “Triumph Cash”). Consumers are gravitating more toward the rebate offer and seeking additional financing from third-party lenders.
About 75% of Euro Cycle’s motorcycle sales thus far in January have been new 2018 models, and each has had “some sort” of rebate on it, Clovis added. Clovis declined to comment on the average number of bikes the dealership sells per month.
“If you come in and you have an 820 Fico score, I can get you a really good interest rate through a third-party bank,” Clovis explained. “So, why don’t you come in, take the $2,000 rebate, and then let me get you a loan with a lower interest rate through a third-party bank rather than take the interest-free financing [from the OEM]. That’s what we’ve seen, and it’s not guaranteed to be more financially optimal for the customer, but that’s what the customers seem to be doing.”
Sometimes OEMs bundle rebates with finance promotions. But when rates are low, bundling becomes too expensive, so the OEM requires the customer to choose between the two. Depending on the preferred loan term, a rebate might make more financial sense, Clovis added.
“If you were buying the bike and you knew you were going to take a loan to the full, let’s say, 50 months, then it probably [makes sense] for you to take the 0% and give up the rebate,” Clovis said. “But if you know you’re going to pay that unit off in two years, it’s much smarter to take the $2,000 or the $1,000 rebate and go with a 5% loan.”