What to Remember when Applying for Motorcycle Loans
Whether it is because the interest rates are high or low or it is the end of a model year with lots of incentives, motorcycle buyers tend to make the same mistakes when shopping for motorcycle loans. The following are four of the common mistakes motorcycle enthusiasts make when they buy the machine with motorcycle loans:
1. Shopping for a motorcycle before shopping for a motorcycle loan.
Many motorcycle buyers visit the motorcycle showroom looking for a motorcycle before they check with the motorcycle loans lender on how much money he is willing to lend to them for the purchase of a motorcycle. There is no need to shop for a Harley Davidson motorcycle costing $20,000 if a lender in the first place is only willing to provide a loan amount of not more than $10,000. It could just be one big frustration for one to be looking at a pricey machine when all he could afford is just the average type of motorcycle.
Potential motorcycle buyers should be aware that when they enter the showroom for the machines, slick salespeople often pressure them into motorcycle loans with much higher internet rates than they could have gotten had they shopped for a motorcycle loan at a bank, credit union or even online. The experienced salespeople as much as possible do not like motorcycle buyers to leave the motorcycle dealership to get a motorcycle loan; they know that this only increases the chance of loosing a sale and a commission which actually is their main source of income. Slick salesmen of motorcycles would always frequently try for a quick sale which normally results in pushing motorcycle buyers to get motorcycle loans or financing right in the motorcycle dealership.
For one to get a fair deal it is always best to shop for a motorcycle loan before entering the showroom of motorcycles.
2. Diving into an unknown motorcycle loan without studying it.
Motorcycle buyers often jump into motorcycle loans that they do not completely understand that may not be the best alternative that they should take. They haven’t studied the loan proposals well especially if they get so enthralled by a shiny new machine displayed in a showroom. In today’s credit card age manufacturers frequently run credit card motorcycle loan promotions on their private-label credit cards. But these promotions only typically offer a low interest rate for a short term like 12 or 24 months, but have a much higher interest rate after the short promotional term. On a credit card promotion, if motorcycle buyers can not afford to pay fully for the loan during the short promotion period at the promotional interest rates, then they should resort to finding a lender offering an installment motorcycle loan for a longer term. The rates of interest they pay here are more reasonable than the ones in the promotional motorcycle loans.
3. Borrowing amounts they cannot afford to pay.
A most common mistake the first time motorcycle buyer makes is in not having a clear sense of how much money he has for a motorcycle that is within his capacity to pay. They get easily dazzled by the powerful roar of the machine in just a short test run and hurriedly sign a motorcycle loan not affordable to them. This is especially true for young motorcycle buyers who look at buying the top sport bikes that are priced in the $10,000 - $15,000 range. What they fail to realize is that financing a $10,000 - $15,000 machine can stretch them thin, resulting in them having only very little cash left to enjoy themselves and the motorcycling lifestyle. They may forget that they still have to pay for insurance, maintenance of the motorcycle, registration for the machine and other accessories for their motorcycle.
4. Not asking the right questions.
Motorcycle buyers should know that there are questions they should ask if they do not understand fully the type of motorcycle loan that they are taking out, which could include the following:
• Is the interest rate for the motorcycle loan fixed or variable? If fixed how long is the paying period?
• Are there circumstances that can make the interest rate on the motorcycle loan go up in the future, especially for the loan with a variable rate of interest?
• What happens if a payment is 30 days late, does the interest rate increase, or are there late payment charges he has to tackle? If the monthly loan payment is also 60 days late, what kind of penalties are payable or what rates of interest ensue?
• How long will be the term on the motorcycle loan? This is vital for the buyer for him to have an idea on what amount will it finally cost him after making all the required loan payments, with the penalties included.
• If the loan is an installment loan, does it use simple interest? A simple interest type of loan is always better for a motorcycle buyer because it does not penalize the buyer if the loan is paid off early.
• What is the down payment requirement to get the motorcycle loan and is it affordable to the buyer?
• Is full coverage insurance for the motorcycle required in the loan proposed?
• How much is registration cost and is this fee included in the amount of the motorcycle loan?
• Are there any administrative fees to be settled to get the motorcycle loan and if so how much are the fees? Would they be reasonable enough for the young motorcycle buyer?
Overall, motorcycle buyers can avoid the common mistakes as culled from the experience of previous buyers by spending a little more time focusing on shopping for a motorcycle loan and asking the questions outlined above. They should ask these questions without seeing the machines first so they can remain level headed and not moved easily to excitement as when they are already in the showroom or already aboard a unit for a test run. They could easily forget to remain calm after they are given a chance to gun up the engine and gets overwhelmed by its powerful roar.
