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Finance tips for your next motorcycle

If you can afford to pay cash for your next motorcycle, that’s great, but if you need finance, there are a few things you should have done first before falling in love with a bike on the showroom floor.

TYPE OF LOANS

Thankfully financing a bike is a lot easier than financing your house or even your car. Leases and mortgages are rare in the motorcycle industry, so you are probably only dealing with a personal loan, hire purchase or a secured loan. They are all pretty much the same thing with only slight differences and it may depend on where you get the money.

You can get your finance through a bank, financial service such as a broker, loan specialist, credit union or building society, or through the motorcycle company or dealership network. Most motorcycle companies and dealer networks these days offer finance as part of their service. Yamaha Moto Finance (YMF) is factory-owned while most others have a financial services business underwritten by a finance company or bank.

But before you head to the showroom you should check with your bank, credit union or building society to see if they will lend you money for a motorcycle. Some of these institutions are pretty conservative and they may look upon a loan for a motorcycle as a luxury item and risky, which could affect their likelihood to grant you the loan. And because of the risk, they may insist on loan protection insurance to secure the loan.

BUDGET

Finance seems to make anything affordable and it is easy to over-extend yourself by buying the “up-spec” model when the standard would suit your needs. RACQ spokesman Steve Spalding suggests setting a budget and sticking to it. “Don’t be pressured to accept a finance offer you are not comfortable with,” he says.

Steve also recommends you look beyond the immediate cost of the bike. “Fully consider the full range of ownership costs before committing to a purchase,” he says. That means factoring in financial costs such as depreciation, registration and insurance; running costs such as fuel, tyres and servicing; as well as rider gear.

Steve Spalding RACQ voidSteve Spalding RACQ

RATES

Do your homework on interest rates charged by the various banks and financial services offering loans. Even a decimal point difference in interest rates can end up changing the final repayment amount by hundreds of dollars.

The good news is that rates are low at the moment and there isn’t a lot of difference between the lenders. But there can be hidden costs, fees and mandatory insurance that is included in the financial package, so do your homework carefully. 

You should also do your homework on the value of the new or used bike you are interested in buying. It will help you decide whether the finance deal is reasonable.

LOAN PERIOD

If your financial institution is prepared to grant you the loan, you also need to work out how long you want your loan period. A short period will attract higher interest rates and, of course, higher repayments, while a longer period will have a lower interest rate and lower repayments. However, you should also ask to see the final cost of the loan at the end of the loan contract. The longer loan will usually cost you more. In fact, you may be surprised just how much the loan will end up costing you.

Also, remember that the average period of motorcycle ownership is five years, so you don’t want a loan period beyond that. In fact, you may be the sort of person who likes to change your bike every two or three years and trying to sell or trade in a bike that is still covered by finance can be difficult. Not impossible, but difficult. So consider how long you will own the bike and tailor your loan to suit.

If you are a novice rider and are restricted to a LAMS bike, you should keep the loan even shorter as you are more likely to want to trade up as soon as you graduate to an open licence.

Your loan contract may also offer you the opportunity to make repayments in weekly or monthly instalments. It may be easier to pay monthly, but it is usually cheaper in the long term to pay more frequently. Check the final costs of each type of repayment scheme before committing.

PENALTIES

Your personal and financial circumstances could change in the next few years and you may need to amend your repayments schedule. For example, you may get a big pay rise or promotion and want to pay off your bike sooner. On the other hand, you could lose your job or work contract and need to lengthen your loan so your repayments are reduced. Check your loan contract to see if there is leeway to lengthen or shorten repayments. If there is, ask if there are any penalty fees for changing the repayments.

CASHsell buy test ride demo motorcycle sales showroom selling motorcycles dive

One of the advantages of securing finance before you go to the motorcycle dealership is that you will have a sum of money guaranteed and you can go shopping for the best deal as if you have cash burning in your pocket. Sales staff love to do deals on cash and you could successfully haggle a few hundred dollars off the price or get free services or accessories thrown in to sweeten the deal.

Also, if you have a guaranteed loan, you can use the cash to buy from a private owner, rather than a dealership. While there are often price advantages in private sales, there are also greater risks and issues you should consider such as whether the bike is still under finance, who is the rightful owner, the lack of guarantees, etc.

BROKERS

It is a hassle running around the banks and financial institutions trying to work out how much money you want to spend and organising a loan. There are now several online brokers who specialise in motorcycles such as Aussie Bike Loans. You can ring them or apply online. Usually you have to supply a lot of personal information which can be a bit risky these days with identity fraud running rampant. Make sure they are a reputable firm and if you are still worried, make a phone call where you can better handle the supply of personal information than via an online form.

Brokers will do the scouting for you to find the best deal to suit your personal and financial circumstances. However, they charge a commission to the supplier of the finance which is added to your own contract.

CORPORATE AND DEALER FINANCE

Most motorcycle companies have a financial services arm. It may be a wholly owned like YMF, or it may be underwritten by an existing financial institution.

Others offer finance at their dealerships, independent of corporate ownership or partnership.

One-make dealers often offer financial services through the motorcycle company’s financial institution or its third-party partner, while some multi-franchise dealers have their own arrangements with financial institutions.

Getting a loan through your dealer, whether it’s the motorcycle company finance company or their own, makes the whole motorcycle shopping business very easy and convenient. Dealers these days are like a one-stop shop. Once you’ve decided on the bike, they can arrange finance, as well as insurance and all the other legal paperwork that seems to take ages and delay you from that golden moment when you throw your leg over your dream machine.

Some dealers can even take some of the immediate financial pain out of running your bike by including some services, accessories and maybe even rider gear in your financial package. However, remember that you will end up paying more in the long run, so be careful what you include in the loan.

Another advantage of corporate or dealer finance is that they can look at the life of the vehicle and maybe even offer you a guaranteed buy-back price at the end of your loan so you can trade up to a newer model.

Harley-Davidson Financial Services offer a guaranteed buy-back system that takes the financial guesswork out of owning a bike.

Luxury car brands have been doing this for years to build brand loyalty and it is starting to filter through to the motorcycle industry, especially luxury brands such as BMW and top-end models.

However, you should read the fine print on these deals because they load up the final price of the bike and there are usually a lot of conditions. They can include a limit on the number of kilometres you can rack up on your odometer, the accessories you add, modifications, servicing by an approved dealer and, of course, the trade-in condition of your bike.Motorcycle dealership sale accessories jeans helmets jackets

BMW’s Full Circle Guaranteed Future Value not only offers variable periods from two to four years, but three options at the end of loan term: Sell or trade the bike and take any profit over and above the GFV; hand back the bike and avoid any losses; or refinance and continue ownership.

Some customers may be concerned that it locks them into buying from that dealer and maybe locks them into buying a certain brand. It’s great if you have loyalty to a particular marque, but not if you want to try different brands.

It could also cost more to finance a bike with a guaranteed buy-back price and you could be risking the whole deal if you damage your bike, even slightly.

Some motorcycle companies see these schemes as a way to develop a long-term partnership with their customers. Meanwhile, customers can view it as an essential service that gives them peace of mind.

ATTRACTIVE RATES

Another point about corporate or dealer finance that you should be aware of is the attractive rates. Dealer finance can sometimes offer finance at low or even zero interest. That is a sales tool that the banks and financial institutions can’t equal because they have to make money on the interest they charge you. The motorcycle manufacturers or  dealers, however, can offer low interest rates because they have control over the final price of the motorcycle. A zero percent loan may look attractive, but you may also pay more for the bike in the long run. Sometimes it’s a genuine low interest rate used as an attractive incentive to push surplus stock, but you should do your sums to work out if the final price really is cheaper or more expensive.

NEW AND USED

While some financial institutions will only offer finance on new bikes, dealers may also offer loans on approved used bikes. Harley-Davidson Financial Services is one such company that offers conventional hire purchase loans on approved genuine pre-owned vehicles. The bikes must come from official Harley dealerships, be Australian compliant, have less than 50,000km on the odo and be under five years old. The advantage is the Harleys also come with a one-year warranty and one-year roadside assistance.

FINAL WARNING

Despite all the homework, you may still blunder your way into a loan that rips you off, or where the contractor fails to fulfil their end of the deal, or where your circumstances change. In the worst case scenario the company could repossess your prized possession!

Before it gets to that stage, if you have a dispute over your loan or insurance, complain to the supplier first as all reputable firms have a complaints department. If you are still not happy, don’t rush off to your solicitor as that can end up costing you a fortune. Instead, go to the Financial Ombudsman Service who offer a free service.

Source: MotorbikeWriter.com

How to Get a Motorcycle Loan and Avoid the Stress

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

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. 

 (Sponsored post)

Source: MotorbikeWriter.com

4 Best Motorcycle Loan Options For Students

(Sponsored loan article for our North American readers)

Today, motorcycles are more popular because of their fuel efficiency and the cost advantage. Kelley Blue Book estimates the average cost of a new car to be $US36,270. In comparison, you can bring home a new motorcycle for less than $5000.

Motorcycles are a cost-effective mode of transportation. However, securing a motorcycle loan can be more difficult than it appears at first glance and you may like to examine the financing options you have.

Motorcycle loans and auto loans

Even though purchasing of a motorcycle is not different from buying a car as far as the process is concerned, you need to look for financing alternatives available for a motorcycle loan. In most scenarios, you can’t avail an automobile loan to buy a motorcycle. Rather, you have to seek a loan that is specifically meant for motorcycles, or other categories of similar vehicles such as recreational or specialty vehicles.

Often, the terms for motorcycle loans are different from auto loans, especially in the repayment period and interest rates.

For example, you can get a car loan for a rate as low 3.09% from SunTrust as of April 6, 2018. But SunTrust puts motorcycles in the category of boats and motor homes and treats all of them as recreational vehicles. The lowest rate on which SunTrust can give you a motorcycle loan is 4.44%.

Loan options

Since motorcycle loan is a lot different from auto loan, it is not a bad idea to examine different financing possibilities to make sure that you get the best deal in the market.

No matter whether you are going to use your motorcycle for primary transportation purposes or for weekend joyrides, you can take out a loan to buy your motorcycle under four main financing choices.

1. Manufacturer financing

You can directly get a motorcycle loan from some manufacturers. For example, Harley-Davidson offers such loans in association with Eaglemark Savings Bank. Depending on your credit history and other factors, you can find a loan at a meager 3.99%. Chances are that you may not be required to pay even a down payment.

Here an important thing to bear in mind is that the manufacturers offer lowest rate loans on select models and under short-term repayment plan. If you are planning to buy a low-priced model or wish to choose a repayment plan longer than 36 months, you are likely to attract higher rates.

2. Dealership financing

You can also get the financing from the motorcycle dealership. Some of them offer loans under a special scheme with the manufacturers but they also partner with multiple lenders. Loans from these lenders usually are available at less stringent conditions than manufacturers, so chances are that you will qualify for a loan if you have poor credit.

However, it can be more expensive to avail a loan from the dealership than from other sources. There is a possibility that you might have to pay more in interest if you did not consider other options, for example, a credit union.

3. Credit union and bank loans

You can make some saving by taking out a loan on your own before visiting the dealership. Motorcycle loans are available at several banks and credit unions and they tend to charge lower rates than the dealerships.

If your credit score is low or don’t have an impressive credit history, seeking a loan from a credit union can be an intelligent option. Credit unions, unlike banks, are nonprofit financial entities and might offer loans on easy terms. You can visit MyCreditUnion.gov to locate a credit union near you if you are not already a member of one such organization.

4. Personal loans

You can also consider personal loan as one of the options to buy your motorcycle. Contingent on your income and history of financially responsible behavior, you could find a loan at rock bottom interest rate of 4.98%. If your credit is in excellent condition and if you can easily make monthly repayment, you will be able to save money by choosing a personal loan.

Even if if your credit isn’t all that great, chances are you will qualify for a personal loan more easily than a motorcycle loan. But if the credit standards are relaxed, personal loans can come at higher interest rates compared to other types of financing.

Also, personal loans are to be repaid in much shorter duration than motorcycle loans. A motorcycle loan can be repaid in up to 84 months while the repayment plan for personal loans is often limited to only 60 months.

Some lenders also give student loan for buying motorcycle. You should also check them out if you qualify for a loan in that category.

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Source: MotorbikeWriter.com