When looking for a motorcycle loan, many people tend to make the same mistakes, even if rates are going up or down or it's the end of a model year and there are lots of deals at the dealership. Most of the time, there are four mistakes that people who buy motorcycles make when they finance them.
- Taking out a motorcycle loan in the dark.
People who ride motorcycles often take out loans that they don't fully understand or that might not be the best choice for them. For example, Japanese motorcycle manufacturers often have credit card financing deals for motorcycles on their private-label credit cards. But these promotions usually offer a low interest rate for a short time, like 12 or 24 months, and then the rate goes up to a much higher level after the short promotional period. On a private label credit card promotion, if a motorcycle buyer can't pay off the loan during the short promotion period, they are usually better off with an instalment loan with a slightly higher rate and a longer term.
- Looking for a motorcycle before looking for a loan for one.
Many people who want to buy a motorcycle go to the showroom to look for one before they find out how much money a motorcycle financing lender will lend them to buy a motorcycle. There's not much point in looking for a $15,000 Harley motorcycle if a lender will only give you a loan for less than what the bike costs.
Also, once motorcycle riders walk into a dealership's showroom, they are often pressured by well-trained salespeople to get a loan with rates that are much higher than they could have gotten if they had looked for a loan at a bank, credit union, or on the internet. Salespeople don't like it when people who ride motorcycles leave the dealership to get a loan. In the salesperson's mind, this just makes it more likely that they won't make a sale and get paid. So, salespeople usually try to make a quick sale, which usually means pushing people who want to buy a motorcycle to get financing at the dealership.
In the end, it's always best to look for a motorcycle lender before walking into a dealership.
- Taking out too much debt.
Most people who buy their first motorcycle don't know how much bike they can afford, which is the most common mistake they make. This is especially true for young bikers who want to buy the most high-tech sport bikes. Most of the time, they don't think about how financing a $20,000 to $17,000 motorcycle might hurt their finances and leave them with little money to enjoy themselves and the life of a motorcycle rider. They might also not have enough money to pay for motorcycle insurance, repairs, vehicle registration, or new accessories.
- Asking the wrong questions.
The first sign that a motorcycle rider should be careful is if they don't know what kind of loan they have. If this happens, they need to make sure to ask even more questions.
The question below can help point people who want to buy a motorcycle in the right direction:
- If a payment is late by 30 days, can the rate go up?
- What are the rules for motorcycle insurance?
- Is the rate of interest fixed or does it change? How long will it be fixed if it is fixed?
- Are there things that could happen in the future that would make the rate on the motorcycle loan change?
- What happens when a payment is overdue by 60 days? Does the rate of interest rise?
- How long does the loan for the bike last?
#! What other fees are there for the loan, and are they included in the loan amount?
- Does the lender charge any fees for processing the loan documents? If so, how much are the fees?
In short, motorcycle riders can avoid making these common mistakes by shopping around for a motorcycle loan and asking the lender a lot of questions about the loan.
Copywritten by Jay Fran, 2005-2006. This article can be shared freely as long as the copyright, author's name, and all links with anchored text are included.
