(Sponsored loan article for our North American readers)
Today, motorcycles are more popular because of their fuel efficiency and the cost advantage. Kelley Blue Book estimates the average cost of a new car to be $US36,270. In comparison, you can bring home a new motorcycle for less than $5000.
Motorcycles are a cost-effective mode of transportation. However, securing a motorcycle loan can be more difficult than it appears at first glance and you may like to examine the financing options you have.
Motorcycle loans and auto loans
Even though purchasing of a motorcycle is not different from buying a car as far as the process is concerned, you need to look for financing alternatives available for a motorcycle loan. In most scenarios, you can’t avail an automobile loan to buy a motorcycle. Rather, you have to seek a loan that is specifically meant for motorcycles, or other categories of similar vehicles such as recreational or specialty vehicles.
Often, the terms for motorcycle loans are different from auto loans, especially in the repayment period and interest rates.
For example, you can get a car loan for a rate as low 3.09% from SunTrust as of April 6, 2018. But SunTrust puts motorcycles in the category of boats and motor homes and treats all of them as recreational vehicles. The lowest rate on which SunTrust can give you a motorcycle loan is 4.44%.
Loan options
Since motorcycle loan is a lot different from auto loan, it is not a bad idea to examine different financing possibilities to make sure that you get the best deal in the market.
No matter whether you are going to use your motorcycle for primary transportation purposes or for weekend joyrides, you can take out a loan to buy your motorcycle under four main financing choices.
1. Manufacturer financing
You can directly get a motorcycle loan from some manufacturers. For example, Harley-Davidson offers such loans in association with Eaglemark Savings Bank. Depending on your credit history and other factors, you can find a loan at a meager 3.99%. Chances are that you may not be required to pay even a down payment.
Here an important thing to bear in mind is that the manufacturers offer lowest rate loans on select models and under short-term repayment plan. If you are planning to buy a low-priced model or wish to choose a repayment plan longer than 36 months, you are likely to attract higher rates.
2. Dealership financing
You can also get the financing from the motorcycle dealership. Some of them offer loans under a special scheme with the manufacturers but they also partner with multiple lenders. Loans from these lenders usually are available at less stringent conditions than manufacturers, so chances are that you will qualify for a loan if you have poor credit.
However, it can be more expensive to avail a loan from the dealership than from other sources. There is a possibility that you might have to pay more in interest if you did not consider other options, for example, a credit union.
3. Credit union and bank loans
You can make some saving by taking out a loan on your own before visiting the dealership. Motorcycle loans are available at several banks and credit unions and they tend to charge lower rates than the dealerships.
If your credit score is low or don’t have an impressive credit history, seeking a loan from a credit union can be an intelligent option. Credit unions, unlike banks, are nonprofit financial entities and might offer loans on easy terms. You can visit MyCreditUnion.gov to locate a credit union near you if you are not already a member of one such organization.
4. Personal loans
You can also consider personal loan as one of the options to buy your motorcycle. Contingent on your income and history of financially responsible behavior, you could find a loan at rock bottom interest rate of 4.98%. If your credit is in excellent condition and if you can easily make monthly repayment, you will be able to save money by choosing a personal loan.
Even if if your credit isn’t all that great, chances are you will qualify for a personal loan more easily than a motorcycle loan. But if the credit standards are relaxed, personal loans can come at higher interest rates compared to other types of financing.
Also, personal loans are to be repaid in much shorter duration than motorcycle loans. A motorcycle loan can be repaid in up to 84 months while the repayment plan for personal loans is often limited to only 60 months.
Some lenders also give student loan for buying motorcycle. You should also check them out if you qualify for a loan in that category.
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