How to Get a Motorcycle Loan and Avoid the Stress: This contributed guide will help you secure a loan for your new motorcycle.
Riding a motorcycle seems fun and adventurous, but it’s harder than most people think. For those thinking about buying a motorcycle, consider taking lessons first.
There is a population of people that only drive motorcycles. These diehard riders belong to bike clubs and can tell you everything you need to know about motorbikes.
If you are considering purchasing a motorcycle you may be wondering how to get a motorcycle loan. It is true that most lenders view these types of loans differently than a standard auto loan.
Before moving forward with the purchase, be sure that it’s an endeavor you want to get into. Owning a motorcycle comes with different pros and cons than owning a car. Are you going to use your motorcycle as a recreational vehicle, or are you ditching your automobile?
Considering a motorcycle? Keep reading for tips on how to get a motorcycle loan.
Motorcycle Loan vs. Auto Loan
A motorcycle loan is similar to an auto loan in that they are both considered collateral loans. This means that the bike secures the loan. If you fail to pay the loan according to its terms the lender can repossess the bike to recoup their loss.
Where the types of loans differ is the interest rates on a motorcycle will be higher than a car loan. You can also expect to pay more for insurance.
To get around the higher interest rates, you may want to consider getting a personal loan and paying cash for the purchase. This way you can save in the long run on interest. Your insurance rates will also be lower if you own the title to the bike.
Another thing to keep in mind is that some lenders will not issue a loan of dirt bikes or All-Terrain Vehicles (ATV). You may also find that there are certain motorcycles that lenders won’t fund.
Before you get your heart set on a particular bike, do your research to ensure you will be able to secure the needed funding and insurance.
How to get a Motorcycle Loan with Your Credit Score?
Applying for credit can negatively impact your credit score. Before researching lenders, perform a credit check-up. Depending on your current rating, you may have to put off making a large purchase.
Consumers can receive a free annual credit report from each of the three major bureaus. Request your report and attend to any outstanding debts that are dragging down your FICO score.
How Your Credit Score Impacts The Loan
If your score is below 700, expect to pay a higher interest rate. Scores below 600 could prevent you from getting a loan. A lender willing to take a chance on someone with bad credit will have terms that will significantly impact the cost of buying your motorcycle.
Going with a subprime lender isn’t a bad thing for those with not so perfect credit. It is an opportunity to help you rebuild your score.
Determine How Much Money You Can Afford to Borrow
A lender will tell you an amount you’re eligible to borrow. This doesn’t mean you can afford to finance that amount. The motorcycle of your dreams may be out of your price range at this time.
Looking at older models of the bike you want is an option to get within your price range. As your finances improve, trade it in for the newer version you want.
When getting a motorcycle loan, you also want to consider the cost of insurance, annual registration fees, and maintenance costs. Determine the annual cost and divide over 12 months. Add this amount to the monthly payment on your loan to see the true cost of buying the motorcycle.
Types of Motorcycle Loans
When it comes to financing your motorcycle there are a few routes you can take. These options range from loans for those with perfect credit to bad credit motorcycle loans.
Dealership loans are financing offered by the dealership selling the motorcycle. These loans are usually reserved for buyers with perfect or near perfect credit. Some dealerships will work with people with less than perfect credit to secure loans.
A dealership often requires a down payment or trade-in as part of the loan requirements.
Operator Equipment Manufacturing Loans
OEM loans are like dealership loans. They are specific to the manufacturer of the motorcycle. These loans are incentive based for the dealer to put an extra emphasis on selling that line.
You may have more room to negotiate when buying from a dealership offering multiple brands.
Secure a Personal Loan
Personal loans can be either secured and unsecured. These loans can be used for any purpose and often come with longer repayment terms.
When using money from an unsecured personal loan to buy a motorcycle you own the bike with a free and clear title. When taking out a secured loan you will need collateral. The collateral does not have to be the motorcycle.
Use a Credit Card
It is possible to find a good motorcycle for a few thousand dollars. In this case, you can buy the motorcycle with the available balance on a credit card.
Credit cards are a line of credit that is easily accessible. Depending on your interest rate it’s a better option. Plus, there are no time frames for repayment. You pay your monthly minimum or a higher amount as you choose.
Keep in mind, the longer it takes to pay off the purchase, the more interest you will pay in the long run.
It’s Time to Go Shopping
There is a lot to think about when making any major purchase. Knowing your options on how to get a motorcycle loan is half the journey. Finding the bike you want is the other half.
If you’re considering the purchase of a motorcycle, learn more about what’s popular in bike sales, check out the rest of this website.