Almost everyone is dreaming about a motorcycle. Riding a motorcycle means always being close to nature and experiencing the test of freedom. Even if you want to test freedom, you need a healthy amount of money for that. However, financing a motorcycle could be tough if you don’t know where to start. Let’s navigate the complexities of motorcycle financing.
Understanding the loan theory
Motorcycle financing is a process to get a loan for purchasing a motorcycle like a car. Loan amount, repayment, and interest rate depend on credit score, income, and price of the motorcycle.
Types of motorcycle loan
There are several types of motorcycle loans, such as:
1. Secured loan- You need collateral for a secured loan and the collateral would be your motorcycle. This loan requires less interest rate and it has favourable terms.
2. Unsecured loan- You don’t need any collateral for an unsecured loan but you have to pay back with a higher interest rate.
Find platforms for loans
You have to contract with multiple loan lenders to increase the chances of financing. Finding the right platform and getting a motorcycle loan is not easy. Here are some platforms that can make your work easy.
1. Banks- Find a bank that offers loans for buying a motorcycle. It’s a secured loan and your new purchasing motorcycle will be treated as collateral. Science it is a secured loan you will get the advantage of repaying the money at a low interest rate. Also, there is a disadvantage that, if you fail on payments they will take possession of your motorcycle.
2. Credit unions- You manage loans from your local credit unions. They also offer secured loans and lower interest rates. They offer a lower interest rate than the large banks. To get this advantage, you have to be a member of a credit union. Joining a credit union is not so tough. If you find you will easily get such types of credit unions that are open for everyone to join.
3. Online lenders- You don’t need any collateral to get a loan from online lenders but you have to pay back with a higher interest rate. Such people get loans from online lenders who don’t have access to loans from any traditional bank. Some online lenders provide traditional motorcycle loans and some of them offer personal loans. It is possible to use a personal loan to buy a motorcycle as well.
4. Dealership financing- Many motorcycle dealers provide finance for the purchase of a motorcycle. A dealer maintains relationships with multiple lenders which can enhance a chance for a loan approval.
5. Manufacturer financing- Many motorcycle manufacturers offer their consumers finance for a new motorcycle. This is a secured loan and it will be secured by your new motorcycle. They might require a down payment. The interesting fact is their interest rate is lower than banks, credit unions, online lenders, and dealership financing.
Prepare to apply for the loan
Before applying for the loan be prepared with the following steps-
1. Credit score- Credit score is the most important thing to get approved for a loan. Lenders will approve your loan, and set interest rates depending on your credit score.
2. Collect documents- For loan application collect papers of proof of income, identification, and proof of residence. Have these documents ready to apply for the loan. Your preparation will help you to stay trouble-free and also help you to speed up the process.
3. Budget- Take into consideration how much money you want to spend on your motorcycle and in total how much you want to take as a loan. There are also some additional costs involved such as maintenance, insurance, registration, and riding gear. Set your budget carefully.
4. Down payment- If I needed a loan to buy a motorcycle I would have made some downpayment and it would be my first choice. A Down Payment increases the chances of loan approval. The lender will also offer a great interest rate that will help you to save money.
Find out the best deal
Things that you should keep in mind before taking any loan is, to compare lenders with each other and see who is offering the better deal. Don’t forget to see the (APR) Annual percentage rate because the interest rate or additional fees can be linked with the loan. According to your financial situation, see what loan terms are available for you. When you are taking a long-term loan you have to repay the loan in small installments every month for a long period but in general, you have to pay more interest which will affect the total cost of your loan. Try to understand all the requirements, terms, and conditions of the loan. Do not hesitate to ask anything to the lender for a better understanding.
Finalize the loan
After finding a loan that meets your expectations apply for the loan online or physically according to their requirements. Once you are approved for the loan make sure the payment method, interest rate, and other terms and conditions meet your needs. After accepting the loan offer you need to sign an agreement and other required papers. Read well before signing those documents.
Take care of your loan
After buying your motorcycle make the loan payment on time to avoid paying any extra fees and maintain a good credit score. Set a reminder so that no payment date gets missed. Always keep an eye on your loan balance so that no such opportunity is missed when the lender gives you a chance to pay more than your monthly installments so that you can grab the opportunity and reduce the interest rate. Maintain good relations and communication with your lender to avoid difficulties.
For example: Suddenly you’re facing difficulties and can’t pay back on time. Share your actual problem with them and they might help by changing your loan term.
Get the finance for your desired motorcycle without breaking the bank or getting depressed, by following the process discussed above and fulfilling your dream.