Frequent Mistakes Made When Looking For Motorcycle
Loans
Whether interest rates are high or low or its the end of a model year with
lots of incentives, motorcycle buyers tend to make the same mistakes when
shopping for a motorcycle loan. Here are four common mistakes motorcycle
buyers make with motorcycle loans.
Shopping for a motorcycle before shopping for a motorcycle loan.
Many motorcycle buyers enter the showroom looking for a motorcycle before they
determine how much money a motorcycle lender is willing to loan to them for
the purchase of a motorcycle. There is no need to shop for a $20,000 Harley
Davidson motorcycle, if a lender is only willing to provide a loan amount of
$10,000.
Additionally, once motorcycle buyers enter the showroom slick salespeople
often pressure them into motorcycle loans with much higher internet rates than
they could have gotten had they shopped for a motorcycle loan at a bank,
credit union or online. Salespeople do not like motorcycle buyers to leave the
dealership to get a motorcycle loan. In the salespersons mind this only
increases the chance of loosing a sale and commission. Therefore, salespeople
frequently try for a quick sale which normally results in pushing motorcycle
buyers to get motorcycle financing at the dealership.
The bottom-line is that it is always best to shop for a motorcycle loan before
entering the showroom.
Borrowing too much.
The most common mistake the first time motorcycle buyer makes in not having a
clear sense of how much motorcycle they can afford. This is especially true
for young motorcycle buyers who look to buy the top sport bikes that cost up
to $10,000 - $15,000. What they fail to realize is that financing a $10,000 -
$15,000 motorcycle can stretch them to thin, resulting in them having little
cash to enjoy themselves and the motorcycling lifestyle. They may also have
too little cash to pay for insurance, maintenance, registration or new
accessories for their motorcycle.
Diving into the unknown motorcycle loan.
Motorcycle buyers often jump into motorcycle loans that they do not completely
understand or may not be the best alternative for them. For instance, in
todays age manufacturers frequently run credit card motorcycle loan
promotions on their private-label credit cards. But these promotions typically
offer a low interest rate for a short term like 12 or 24 months and have a
much higher interest rate after the short promotional term. On a credit card
promotion if motorcycle buyers can not afford to pay off the loan during the
short promotion period, then they are typically better taking a slightly
higher interest rate on an installment motorcycle loan for a longer term.
Not asking the right questions.
The first warning sign that motorcycle buyers should see is that if they do
not understand the type of motorcycle loan, then they should be sure to ask a
lot of questions.
Here are some good questions to ask:
What happens if a payment is 30 days late? Does the interest rate increase?
Are there any administrative fees to get the motorcycle loan and if so how
much are the fees?
Are there circumstances that can make the interest rate on the motorcycle
loan change in the future?
If the loan is an installment loan, does it use rule of 78 or simple
interest? (Simple interest is always better because it does not penalize the
motorcycle buyer if the loan is paid off early.)
What happens if a payment is 60 days late? Does the interest rate increase?
How long is the term on the motorcycle loan?
Is the interest rate fixed or variable? If fixed how long will it be fixed
for?
What is the down payment requirement to get the motorcycle loan?
Is full coverage insurance required?
How much is registration and are these fees included in the motorcycle loan?
Overall, motorcycle buyers can avoid these common mistakes by spending a
little extra time focusing on shopping for a motorcycle loan and asking lots
of questions.
Copyright (c) 2005, by Jay Fran.
http://www.motorcycle-financing-guide.com/military-motorcycle-loans.html
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