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-   -   Buffett invests in Harley-Davidson (https://www.motorcycle.com/forum/motorcycle-news/10611-buffett-invests-harley-davidson.html)

Administrator 02-04-2009 01:57 PM

Buffett invests in Harley-Davidson
 
Original Article:
Buffett invests in Harley-Davidson

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acecycleins 02-04-2009 02:17 PM

Buffet gives HD it's own private bailout. Hello DC!- this is how capitalism works. Public funding of Private corporations is a no-no in real world economics.

Dr_Sprocket 02-04-2009 04:41 PM

I mite hafta git me sum a dat!

anrajala 02-07-2009 09:41 AM

So HD is borrowing money with 15% interest from those two dudes. Geez. I'm sorry but I can't see any sense in this. Can't they get money with any less interest? I'm paying under 5% on my house loan, does it mean I am financially more sound than the Motor Company?

Secondly, they have to charge their customers 15+% annually to make the numbers match. Who will buy a recreational vehicle with that high interest cost these days? Anybody willing to is too stupid to be given any loans.

- cruiz-euro

BrowningBAR 02-07-2009 09:57 AM

Quote:

Originally Posted by anrajala (Post 203788)
So HD is borrowing money with 15% interest from those two dudes. Geez. I'm sorry but I can't see any sense in this. Can't they get money with any less interest? I'm paying under 5% on my house loan, does it mean I am financially more sound than the Motor Company?

Secondly, they have to charge their customers 15+% annually to make the numbers match. Who will buy a recreational vehicle with that high interest cost these days? Anybody willing to is too stupid to be given any loans.

- cruiz-euro

1,345 posts. All amazingly consistent.

In two paragraphs you were able to be wrong no less than 7 times.

acecycleins 02-07-2009 09:57 AM

Quote:

Originally Posted by anrajala (Post 203788)
So HD is borrowing money with 15% interest from those two dudes. Geez. I'm sorry but I can't see any sense in this. Can't they get money with any less interest? I'm paying under 5% on my house loan, does it mean I am financially more sound than the Motor Company?

Secondly, they have to charge their customers 15+% annually to make the numbers match. Who will buy a recreational vehicle with that high interest cost these days? Anybody willing to is too stupid to be given any loans.

- cruiz-euro

First, a simple interest 15% loan isn't as bad as you think. Not great, but Buffett's not a bank. He made it as an investment with a future payoff. It's not like HD is going to be making payments. They sold the note based on a payoff of 15% profit at the end of the loan term.
Second, unless you're banking a 750 or higher credit score most people in recreation loans pay between 12-17% on a 60-72 month loan. It's way more common than you think.

The_AirHawk 02-07-2009 09:59 AM

So far as a proportion of total dollars, they're probably getting a better Deal than your Compounded 5% Mortgage. In 30 years, you'll have given three to four times what your house is worth. In 5 years, Harley will have paid back 15% of $600M.

As it stands, if my math has been correct (and so far it has) on my own 30-year 7% Mortgage I will pay the house off in another 5 years, and paid only ~1-3/4 to 2 times the asking price. Right about the time both cars are paid as well.

It WAS originally going to be paid-off in ~12-1/2 years rather than 15, but I had to cut back, and then stupidly bought 3 cars, 2 more motorcycles, etc. instead of increasing the payment again. If you make just ONE extra payment on a 30-year mortgage per annum, you will cut the time you spend paying on your house by nearly 9 years, and saved about 1/4 of what you would have paid. But it takes nearly three-extra payments to increase the "savings" to 18 years and cut your cash-outlay in half.

sarnali2 02-07-2009 11:34 AM

Three extra payments and you knock 18 yrs off the mortgage? Wow, that's worth a look...

I totally absolutely blindingly suck at math, other than some basic formulas I'm totally hopeless. I do have a 5% 30yr mortgage though so that's not bad and I could come up with a few extra payments a year if I had to....

anrajala 02-08-2009 10:30 AM

Hmmmm
 
Quote:

Originally Posted by BrowningBAR (Post 203791)

In two paragraphs you were able to be wrong no less than 7 times.

Seven mistakes and you couldn't point out even one for me, could you now? I didn't think so either.

- cruiz-euro

BrowningBAR 02-08-2009 10:54 AM

Quote:

Originally Posted by anrajala (Post 203849)
Seven mistakes and you couldn't point out even one for me, could you now? I didn't think so either.

- cruiz-euro

Ok, I’ll give you eight. Here we go:

1. The entire post was your standard anti-HD post, which is always wrong.

2. So HD is borrowing money with 15% interest from those two dudes. Geez. I'm sorry but I can't see any sense in this.
It pays off their debt and the loan will be paid back in the short term. Seems to make perfect sense.

3. Can't they get money with any less interest?
It is a private loan, not through a bank. And Buffet is taking advantage of the tight credit market and banking problems. Maybe they might be able to do better in an economy with a better credit market and through a bank, but not right now.

4. I'm paying under 5% on my house loan
Completely unrelated, thanks for sharing, though. But I will mention that it was not uncommon when the credit and loan markets were tighter in the 1970s and 1980s that a home loan was 10%-17%. Which we could end up going back to.

5. does it mean I am financially more sound than the Motor Company?
No it doesn’t. You don't see the difference between a home loan and a $600,000,000 corporate loan?

6. Secondly, they have to charge their customers 15+% annually to make the numbers match.
No they don't.

7. Who will buy a recreational vehicle with that high interest cost these days?
About 80% of the motorcycle buying public that needs financing will.

8. Anybody willing to is too stupid to be given any loans.
A motorcycle is a luxury purchase. Thus, it is subjected to a higher loan interest rate. It is common for financing rates to be between 13% and 18%.


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