You have decided to buy a motorcycle and are ready to go find the perfect one. You might have already choose a certain model or want to find one that stand’s out to you at a motorcycle dealership. Before you start to look for your perfect motorcycle it is best to get your financial situation in check.
Getting a motorcycle loan in a lot of ways is very similar to getting a car loan.
The difference is you will find there are less Lenders that are willing to give you their money for this purchase. Even though motorcycle loans are becoming more available some institutions still feel it is a specialty loan.
Getting a motorcycle loan does not have to be a painful process and it can actually be a positive for you. You get the motorcycle of your dreams and are able to build up your credit rating. If you do your research and find the loan best suited for you needs, do not overspend on your motorcycle and pay off the loan on time you are going to be onto a winner.
As with all loans you will want to find out your credit rating.
You can obtain 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 carry out a credit check through us. We do not decide who should get credit, but the information we provide (which you can see by asking us to send you your credit report) may help the lender to decide. This information includes details of the electoral roll, court judgments, bankruptcies and your current and past credit commitments.
Consider how much you can afford
Be honest with yourself when considering how much you can afford to borrow and you will be able to afford the monthly payments. You don’t want to end up taking a loan out for a motorcycle then realising you cant afford to make the repayments and ending up in debt.
Shop for a motorcycle within your loan amount or you will be disappointed.
This is the reason that you go and find out what motorcycle loan is available to you before you start looking for a motorcycle. You would not want to have your heart set on a £15,000 motorcycle when all the Lenders will loan you is £7,500. And do not forget about the extra costs explained above.
Another reason to get a motorcycle loan before shopping for the motorcycle is that if you do not you might be talked into using the dealerships financial services. Dealerships on a whole do not give customers good deals on loan rates. Unless your credit is so bad you believe this is the only way you can afford a loan should 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 the loan off early?
- what would happen when if you are late on a payment?
- Will the interest rate increase if payment is 30 days late?
Looking for loans online
Many online finance companies no longer require an application fee so you are saving already with this method. Some agencies might require a down payment either but it is always wise to put down some money if at all possible. Online loans have advantage such as usually have a lower APR. Shopping online saves you time because the approval process can be take as little as 15 minutes.
dealership’s finance department
Dealers use their loan department as an extra way to make money. They know that people that use that department are usually desperate or making a spare of the moment decision and can be milked by the high APR.
Repayment Schedules For online loans are usually 12 – 36 months. There are longer ranged 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 in which you are paying all the interest first. This will leave you upside down on your payments if you decide to sell the motorcycle before the end of your loan. As mentioned earlier look for a lender that does not have a prepayment penalty. You do not want to be stuck with an extra fee for being able to pay off your bike early.