Whether interest rates are high or low or it’s the end of a model year with lots of incentives, 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 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 a motorcycle purchase. There is no need to buy a $20,000 Harley Davidson motorcycle if the lender is only willing to make a $10,000 loan.
In addition, once motorcycle buyers enter the showroom, savvy salespeople often pressure them into motorcycle loans at much higher internet rates than they could have gotten had they purchased a motorcycle loan at a dealership. bank, credit union or online. Sellers don’t like it when motorcycle buyers leave the dealership to get a motorcycle loan. In the sellers’ mind, this only increases the chance of losing a sale and a commission. Therefore, sellers frequently attempt a quick sale which typically results in pressuring motorcycle buyers to obtain motorcycle financing at the dealership.
The bottom line is that it’s always best to shop around for a motorcycle loan before you hit the showroom.
Dive into the unknown motorcycle loan.
Motorcycle buyers often jump into motorcycle loans that they don’t fully understand or that may not be the best fit 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 cannot repay the loan during the short promotional period, then it is usually best to find a lender that offers a longer term motorcycle installment 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 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 cause them to become overly stressed, leaving them short on cash to enjoy themselves and the motorcycle 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 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 may 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.
