Automotive leasing has grown dramatically in the past decade. The trend hasn’t really taken hold in the motorcycle business, but it is possible, and in some cases advantageous, to lease a motorcycle.
Some basics first.
What is a lease, and how is it different from a purchase? In a vehicle lease, you get to use and maintain a vehicle for a set period of time, but you don’t own the vehicle. You put down a security deposit, and make a monthly lease payment that covers your use and a calculated portion of the vehicle’s projected depreciation. At the end of your lease period, you return the vehicle to the leaseholder (usually the dealership or broker who leased it to you), and you walk away. You have not built any equity in the vehicle – you paid for your use of the vehicle. The dealer or broker then sells the vehicle to another buyer as a used vehicle. There are intricacies and other variations within that formula, of course – but that’s the basic concept.
In a purchase, you pay for the vehicle and you own it. If you choose to finance your purchase, you will probably need to make a down payment and then monthly payments until you have covered the entire purchase price. Until then, the financing entity will hold a lien on your vehicle. Every payment that you make represents equity in your vehicle. Once you have made all of the payments, the lien will be released, and you will be the full legal owner.
Leasing generally requires a smaller initial investment, and lower monthly payments for the same vehicle. That’s the big advantage. Also, some leasing arrangements can offer tax advantages – check with your accountant, because every case is different.
Most leasing arrangements include a mileage limit and penalties for excessive wear and tear upon return. They also require adherence to manufacturer’s maintenance schedules. In most cases, leased vehicles cannot be modified or customized during the lease term.
Purchased vehicles have no such restrictions or requirements. It’s smart to maintain your vehicle, but that’s up to you.
So, how does this translate to motorcycles? Why would you want to lease a bike instead of buying one?
Lower initial cost and monthly payments are the big incentive, but not the only one. If you’re the kind of rider who wants to change bikes frequently, always riding a new, advanced motorcycle, leasing could be a good option. Motorcycle resale values are notoriously volatile, and leasing can insulate you from the ups and downs of the marketplace. You’ll know exactly how much it will cost you to ride your new bike during the term of your lease, with no surprises at the end of your term. You can opt for short lease terms, one or two years, and swap brands and styles frequently without the need to market and sell a used bike or take a big loss on a trade-in.
None of the big manufacturers currently have a factory leasing program, but many powersports dealers and specialty financing companies run programs in major cities. An internet search will lead you to many opportunities.