Taking a trip around the countryside or mountains on your motorcycle is great fun and very refreshing. But perhaps the issue standing in your way from making this dream come true is the lack of finances to buy a motorcycle. If this is your concern, you’re not alone as many people often lack the money to purchase a motorbike. Fortunately, you don’t have to give up just yet on your dream to drive around on your motorcycle. That’s because you can choose to get a motorcycle loan. But before going ahead with the purchase, there are a couple of essential things you must consider. This way, you can be sure that your journey to becoming a motorbike owner starts on the right note. Without further ado, here are vital financial tips when applying for a motorcycle loan:
Check your credit history
Motorcycles are usually considered to be a luxury by many lenders. Because of this, you need to make sure you’ve got an excellent credit score before applying for a motorcycle loan to get great financing options. This isn’t different from the process you’ll have to go through to apply for a loan for other significant purchases. Take for example the process of taking out a loan to buy a car. For more details check “Empower Federal Credit Union” and other reliable sources. Knowing this, you should first check your credit history before you even approach a lender for a motorcycle loan. Doing this allows you to confirm your credit ratings with the other lenders and remove any error that might be present before the new potential lender conducts their check. In addition, your income and bank account statement will also be examined as this will help the lender gauge whether you’ll manage to repay the debt. Having a saving habit also increases your chances of landing a motorcycle loan.
Know your budget
Much like buying any other item, you need to always stick to your budget. This isn’t only considered the responsible thing to do but also increases your chances of getting your loan request approved as you’ll be seen as a reasonable borrower. Therefore, you shouldn’t rush to the decision of buying a motorbike without considering your budget. For example, you shouldn’t request a loan to buy a motorbike priced at tens of thousands of dollars, yet your monthly income isn’t that substantial. Such a mistake will only lead to you having a hard time settling your debt, thereby causing you financial stress. Instead, you should take out a motorcycle loan that you can afford and is within your budget.
Do your research
Once knowing how much money you can spend on buying a motorcycle, the next thing to do is shopping around for one. Doing this is necessary as motorcycle specs differ in make, model, and manufacture year. Therefore, you should consider such factors when looking for an ideal motorbike, and some of the aspects to consider include price, riding position, weight, and engine size. You should also take your time shopping around for a suitable motorbike with the expressed goal of finding the best possible loan deal. Doing this provides you with more knowledge on where you can make sound financial decisions. After finding a lender with an excellent deal, you can even start negotiating for lower rates since you know their competitors’ offers.
Carefully examine the payment terms
When you find a lender willing to lend you the motorcycle loan, it can be easy to get carried away. However, you need to maintain your cool and examine the terms of payment closely. This includes the interest rate, the required down payment, the dates of payments, and penalties when you delay repayment. Nowadays, many lenders request postdated checks when making monthly payments rather than the previous system where you needed to have collateral as your loan’s guarantee. You should also examine your motorcycle loan terms in the event that you default making payments. This way, you can prepare the suitable remedies for these incidences.
Prove you’re not a risk
The goal of lenders is to make money from disbursing loans. Therefore, they’ll only issue loans to persons whom they deem to be less risky and have a higher likelihood of paying them back within the agreed period. Knowing this, you need to prove that you’re a risk worth taking by improving your credit rating. This way, you’ll save yourself time and money. Other ways of showing you aren’t a risk include the following:
- Issuing your credit provider with proof of stable employment. It would be even better if you could demonstrate that you’ll remain employed for an extended duration.
- Buying a new motorcycle is viewed as a safer choice by lenders because it can be used as security for backing the bike loan. For older motorbikes, you’ll have a harder time getting a loan due to its low resale value.
- Choose a realistic figure that best suits your needs, as this greatly determines whether your loan request will be successful.
Know the loan period
If your request for a motorcycle loan is successful, you also need to determine the loan repayment duration. You must do this as this directly affects the interest rate and your monthly repayments. In addition, you need to know about the loan’s final cost once the loan contract comes to an end. For example, a shorter loan period means higher interest rates which translate to higher monthly repayments. But the final loan cost is a lot lower than if the loan period is longer. Therefore, you need to factor in both of these to find a balance that best suits you. When factoring in the loan period, you also need to remember the average motorcycle ownership period, which is typically five years. This means the loan period shouldn’t exceed this duration. You also should consider how long you’re planning to keep the motorbike, especially if you have a habit of wanting a different bike after two or three years. If this is the case, it can be a lot harder to find a motorcycle loan.
Takeaway
If you’re looking to buy a motorcycle but don’t have the cash, getting a loan is recommended. But you shouldn’t take out the motorcycle loan without doing your due diligence, as this is the only way to confirm that you’re making the right decision. And to ensure you make an informed decision, discussed above are the important tips to remember when applying for your motorcycle loan.
