Motorcycle Financing Tips - To save you money
Top
Financiers
The key to getting the best deal is preparation and studying my motorcycle financing tips should help you to avoid some painful mistakes. Remember that your lenders negotiate deals every day and they are trying to make as much money out of you as they can. They are the specialists here so you need to know your stuff. Uncertainty is your enemy. These motorcycle financing tips will help you reduce this.
- Review your credit status. This free credit report will show you your
credit score which indicates how likely lenders are to offer you a loan.
*Bonus Motorcycle Financing Tip* I would also recommend that you familiarise with these Motorcycle financing tips on credit report myths - Calculate your monthly payment and how much the loan will really cost you. You can use an online loan calculator to clarify what your payments will be. Online calculators are great, but watch out for certain finance lenders that add hidden fees into their interest rate quote. (This is one of the most important motorcycle financing tips that I could give you.) Under normal circumstances all you need to do is plug the appropriate numbers and you will know your monthly payment
- Do not shop for a motorcycle before shopping for a motorcycle financing. Tips: You don’t know what you can buy until your finances are sorted and you won’t have to deal with salespeople pushing you to get a loan at the dealership that is more expensive than you can find elsewhere
- Getting approved on the web may help you get a much better APR than at a local bank.The interest rate you are quoted may depend on your past credit history
- Consider how much you can afford, and what monthly payment you can afford.Be honest with yourself as this will ensure that you
find the best financing deal for your situation.
*Bonus Motorcycle Financing Tip*Debtbuster Loans has a great budget planner thats free and easy to use. - Do not borrow too much.Have a clear sense of what you can afford, and this includes being clear on how much it will take to finance a loan. You will also need to account for the cash it will take to pay for insurance, maintenance and registration
- Compare the Annual Percentage Rate (APR) of your lenders. The APR is the cost of your credit as a yearly rate. Make sure you get the Annual Percentage Rate (APR) because it is the best way to work out the total cost of your purchase. You can check out the APR of selected lenders on my bad-credit motorcycle financing tips.
- If a deposit is necessary to hold your motorcycle be sure you find out if you can get the deposit back if you change your mind. If you are going to pick up your bike within 30 days, my motorcycle financing tip would be to put a deposit on your credit card. This way if there is an issue with getting your deposit back you can dispute it through your credit card company
- Be careful of low payment promotions that seem like a fixed rate, but where the rate is only fixed for a short term. After the specified short term agreement period, the interest rate increases to an extremely high interest rate which can go unnoticed until it too late. You may also have to have a large down payment to qualify or purchase additional options like extended warrantees or credit insurance
- Think carefully about the length of your loan. Many people like taking out longer terms to lower the monthly payment, but there is a danger of being caught 'up side down' when selling or trading in their motorcycle before the term period is over. In such a case, the value of your motorcycle is less than what you owe on your motorcycle loan
- Look for simple interest as opposed to the rule of 78. Simple interest does not penalise you if you decide to pay off your motorcycle loan early, and so minimises your chance of being caught ‘upside-down’
- If you want a 72 or 84 month term, be sure to find a motorcycle lender that uses simple interest. Rule of 78 penalises you as a motorcycle buyer because it charges mostly interest in the first 36 months. Consequently, you are paying very little towards the principal on your loan during the first 36 months. This can really hurt you if you sell your motorcycle because you will likely find your motorcycle is worth much less than you owe
- Familiarise yourself with financing jargon.
*Bonus Motorcycle Financing Tip* Debtbuster Loans has a great jargon buster to help you get your head around all of these terms - Motorcycle lenders associate longer term motorcycle financing with more risk. As a result, lenders often use an interest calculation that penalises motorcycle buyers if they pay off the motorcycle early. This calculation is called the Rule of 78. If you get motorcycle financing with a Rule of 78 interest calculation, it is also easy to be ‘up side down’ with an 84 month motorcycle loan
- Once you are approved negotiate with lenders. If you choose to negotiate, be persistent and you may find that lenders are willing to make concessions
- Read and understand every word on the application or contract that you are filling out. Do not sign or commit to any contract
unless you understand it 100%, remember that there is no rush, so take all the time you need to understand the small print
- Leave no blanks on the contract. Make sure you cross out all blank lines
- If you get financing from a bank, be clear on what is included in the numbers. Banks often include hundreds of pounds of administration fees in the costs. The reason they get away with this is because these charges often increase the monthly rate incrementally by a small amount, but at the end of the day, these increments add up to a substantial amount. If you are worried that a bank is adding in extra fees, I suggest that you take the contract home and use an online calculator to check the numbers - this motorcycle financing tip could save you cash, so please take it into consideration!
- Be wary when fees are included into the interest rate. If this is the case, back out the fees from the rate or find out what the APR is without the administrative fees included in the rate. Note that backing out the fees from the rate is a complex calculation; it is much simpler to ask for the APR without the administrative fees
- In general, interest rates on new motorcycles are typically lower than on used motorcycles. Also, new motorcycles can be financed over longer terms than used ones
- If you get special motorcycle financing it is even more important to get ALL the numbers up front. The interest rate and down payment requirements may be more complex. Also be clear on the details like the value of your trade in or the length of the loan you take
- One other choice for motorcycle special financing is a home equity loan also known as a secured loan. You will get better rates and the payments may also be tax deductible. But never push your loan to value ratio to a point where you are vulnerable of loosing your home
- Have your motorcycle financing approved before you enter a dealership. Dealers love cash up front as it makes for an easy hassle-free sale plus you can bargain on price. Also, as you would have already agreed on your price you are not in danger of the dealer trying to sell you something that you cannot afford or accessories that you don’t really want
- Establish a high, medium, and low price you are will to accept. This is an obvious motorcycle financing tip but take heed and no matter how you decide to finance your motorcycle, do not step into a showroom without having a set a clear price range that you can afford
Remember: know exactly how much you can spend, and be sure you read & understand every document you sign 100%. Print out my motorcycle financing tips as a reminder if you need to!