You’re 50 and retired. Time to tick another item off your bucket list. That leather jacket has been hanging in your closet for too long. However, to fully embrace the biker lifestyle, you’ll need a ride that’s worthy of the attire.
At first glance, shopping for a motorcycle loan could seem easy. Especially if you’ve gotten a car loan in the past. Yes, the process is similar in the broad sense but motorcycle loans have specific caveats.
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Here are three things you may not know, but need to remember about motorcycle loans.
Your Loan Can Be Paid Via Credit Card
Some motorcycle manufacturers offer a financing option in the form of a credit card. The card itself has the manufacturer’s name on it but is usually managed by a third party bank. Terms for this can vary. Some companies have a promotional interest rate that expires after a specific period of time. Others may offer a fixed monthly rate for the entire loan term.
It’s important to note that late payments can result in monthly installments reverting back to the standard rate, which is usually more than 20 percent.
A Longer Loan Term Could Turn Out Problematic
Cars depreciate significantly when they’re used a lot. However, motorcycles lose their market value much quicker than autos. At the start, a longer loan term might seem like the cheaper option but you’ll eventually find that you owe more on that motorbike than what it’s actually worth.
Avoid this pitfall by opting for a motorcycle that allows you to make budget-friendly payments on a shorter loan term. This will be a much better option in the long run.
Your Dirt Bike Won’t Qualify for a Secured Loan
Lenders are more inclined to offer secure loans for road registered motorcycles. If you want to purchase a dirt or trail bike, you’ll need to apply for a non-secured loan.
Of the two loan types, the secured loan has lower interest rates. This is because lenders take security over your bike. Since they assume more responsibility, lenders are also generally more selective of who gets approved for this type of loan.
Financial Status Matters
The financial picture you paint for yourself plays a major role in determining the amount and terms of your loan. Take advantage of the free credit report you can get annually from each of these credit reporting agencies Experian, TransUnion, and Equifax. Check each one to get an idea of what lenders will see and make sure that all information is reported accurately.
Do you carry credit card balances? Get that credit utilization ratio below ten percent. This tells the lender that you’re not going to use every dollar of credit extended to you. Financial institutions see this as a sign of a good borrower.
