Whether interest rates are high or low or it’s the end of an incentive-heavy 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.
Buying a motorcycle before buying a motorcycle loan.
Many motorcycle buyers walk into the showroom looking for a motorcycle before determining how much money a motorcycle lender is willing to lend them toward the purchase of a motorcycle. There is no need to buy a $20,000 Harley Davidson motorcycle if the lender is only willing to provide a $10,000 loan.
In addition, once motorcycle buyers enter the showroom, they are often pressured by savvy salespeople for motorcycle loans with much higher internet rates than they could have obtained if they had purchased a motorcycle loan at a discounted rate. 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 missing a sale and a commission. Therefore, sellers often attempt a quick sale which typically results in pressuring motorcycle buyers to obtain motorcycle financing at the dealer.
The bottom line is that it’s always best to shop around for a motorcycle loan before you walk into the showroom.
Dive into the unknown motorcycle loan.
Motorcycle buyers often jump at motorcycle loans that they don’t fully understand or may not be the best alternative for them. For example, in today’s era, manufacturers often run credit card motorcycle loan promotions on their private label credit cards. But these promotions usually offer a low interest rate for a short period like 12 or 24 months and have a much higher interest rate after the short promotional period. In a credit card promotion, if motorcycle buyers can’t afford the loan during the short promotional period, then it’s usually best to find a lender that offers a longer-term installment motorcycle loan.
Borrow too much.
The most common mistake a first-time motorcycle buyer makes is not having a clear idea of how much motorcycle they can afford. This is especially true for young motorcycle buyers looking to buy the best sport bikes that cost between $10,000 and $15,000. What they don’t realize is that financing a $10,000 – $15,000 motorcycle can cause them to become overly stressed, 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 look for is that if they don’t understand the type of motorcycle loan, then they should be sure to ask lots of questions.
Here are some good questions to ask:
o Is the interest rate fixed or variable? If it is fixed, how long will it be fixed?
o Are there circumstances that could cause the motorcycle loan interest rate to change in the future?
o What happens if a payment is 30 days late? Does the interest rate increase?
o What happens if a payment is 60 days late? Does the interest rate increase?
o What is the term of the motorcycle loan?
o If the loan is in installments, 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 costs included in the motorcycle loan?
o Are there administrative fees 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 more time shopping for a motorcycle loan and asking lots of questions.
