Whether interest rates are high or low or the end of a highly incentive model year, motorcycle buyers tend to make the same mistakes when looking for a motorcycle loan. Here are four common mistakes motorcycle buyers make with motorcycle loans.
Buy a motorcycle before you buy a motorcycle loan.
Many motorcycle buyers enter the showroom looking for a motorcycle before determining how much money a motorcycle lender is willing to lend them for the purchase of a motorcycle. It is not necessary to buy a $ 20,000 Harley Davidson motorcycle, if a lender is only willing to provide a $ 10,000 loan.
Additionally, once motorcycle buyers enter the showroom, they are often pressured by skilled sellers to obtain motorcycle loans at much higher internet rates than they could have had if they had purchased a motorcycle loan in a bank, credit union or online. Sellers don’t like motorcycle buyers leaving the dealership to get a motorcycle loan. In the minds of sellers, this only increases the chance of losing a sale and a commission. Therefore, sellers often try to make a quick sale, which usually pushes motorcycle buyers to obtain motorcycle financing at the dealership.
The bottom line is that it is always best to purchase a motorcycle loan before entering the showroom.
Dive into the unknown motorcycle loan.
Motorcycle buyers often launch into motorcycle loans that they do not fully understand or may not be the best alternative for them. For example, in today’s age, manufacturers frequently offer credit card motorcycle loan promotions on their private label credit cards. But these promotions usually offer a low interest rate in the short term, such as 12 or 24 months, and have a much higher interest rate after the short term promotional. In a credit card promotion, if motorcycle buyers are unable to repay the loan during the short period of the promotion, they’d better find a lender who offers a longer-term installment motorcycle loan.
Borrowing too much.
The most common mistake a first-time motorcycle buyer makes is not having a clear idea of how much motorcycle you can afford. This is especially true for young motorcycle buyers looking to buy the best sports bikes that cost between $ 10,000 and $ 15,000. What they don’t realize is that financing a $ 10,000- $ 15,000 motorcycle can stretch them too far, leaving them with little cash to enjoy themselves and the motorcycling lifestyle. They may also have very little cash to pay for insurance, maintenance, registration, or new accessories for their motorcycle.
Not asking the right questions.
The first warning sign motorcycle buyers should see is that if they do not understand the type of motorcycle loan, they should be sure to ask a lot of questions.
Here are some good questions to ask:
o Is the interest rate fixed or variable? If fixed, how long will it be fixed?
o Are there circumstances that could cause the interest rate on the motorcycle loan to change in the future?
o What happens if a payment is late for 30 days? Does the interest rate increase?
o What happens if a payment is 60 days late? Does the interest rate increase?
o How long is the term of the motorcycle loan?
o If the loan is an installment loan, do you use the rule of 78 or simple interest? (Simple interest is always better because it doesn’t penalize the motorcycle buyer if the loan is paid off early.)
o What is the down payment requirement to get the motorcycle loan?
o Is full coverage insurance required?
o How much does registration cost and are these fees included in the motorcycle loan?
o Is there an administrative fee to obtain the motorcycle loan and, if so, how much are the fees?
In general, motorcycle buyers can avoid these common mistakes by spending a little extra time shopping for a motorcycle loan and asking lots of questions.
