You have decided to buy a motorcycle and you are ready to go looking for the perfect one. You may have already chosen a certain model or you may want to find one that stands out for you at a motorcycle dealer. Before you start looking for the perfect motorcycle, it is best to take a look at your financial situation.
Getting a motorcycle loan is in many ways very similar to getting a car loan.
The difference is that you will find that fewer lenders are willing to give you their money for this purchase. Despite the fact that motorcycle loans are becoming more widely available, some institutions still feel that it is a specialized loan.
Getting a motorcycle loan doesn’t have to be a painful process, and in fact, it can be a positive for you. You get the motorcycle of your dreams and you can increase your credit rating. If you do your research and find the loan that best suits your needs, don’t overspend on your motorcycle, and pay the loan back on time, you’ll be a winner.
As with all loans, you’ll want to find out your credit score.
You can get a free credit report from Experian
Who is Experian?
Experian is the UK’s largest credit reference agency. When you apply for credit, you will probably give the lender (the company you want credit from) permission to run a credit check through us. We don’t decide who gets credit, but the information we provide (which you can see when you ask us to send you your credit report) can help the lender decide. This information includes details of the voter roll, court decisions, bankruptcies, and your current and past credit commitments.
Consider how much you can afford
Be honest with yourself when considering how much you can borrow and how much you will be able to afford the monthly payments. You don’t want to end up taking out a loan to buy a motorcycle, only to find that you can’t make the payments and end up in debt.
Buy a motorcycle within your loan amount or you will be disappointed.
This is why you go and find out what motorcycle loan is available to you before you start looking for a motorcycle. You don’t want to have your heart set on a £15,000 motorcycle when all the lenders will loan you £7,500. And don’t forget about the extra costs explained above.
Another reason to get a motorcycle loan before you buy is that if you don’t, you may be talked into using the dealer’s financial services. Dealers as a whole do not offer customers good deals on loan rates. Unless your credit is so bad that you think this is the only way you can repay a loan if you walk into the dealership ready to use their finance department.
When discussing a motorcycle loan with a loan company, ask questions about the loan.
- Ask if the rate is fixed or variable.
- Would the rate change in the future for any reason?
- What are the administrative fees associated with this loan?
- Are there any penalties for paying off the loan early?
- What would happen if you are late on a payment?
- Will the interest rate increase if the payment is 30 days late?
Looking for loans online
Many online finance companies no longer require an application fee, so you’re already saving with this method. Some agencies may also require a down payment, but it is always wise to make a down payment if possible. Online loans have the advantage that they usually have a lower APR. Shopping online saves you time because the approval process can take as little as 15 minutes.
dealership finance department
Dealerships use their loan department as an additional way to make money. They know that the people who use that department are usually desperate or make a momentary decision and can be exploited by the high APR.
repayment schedules
Online loan repayment schedules are typically 12 to 36 months. There are longer-term loans, up to 72 months in extreme cases. Many finance companies use the simple interest method as a way to calculate your monthly payments. You never want to get a loan with the rule of 78 where you pay all the interest first. This will throw you upside down on your payments if you decide to sell the motorcycle before your loan is due. As mentioned above, look for a lender that does not have a prepayment penalty. You don’t want to have to pay an extra fee to be able to pay for your bike early.