Financing a motorcycle
Posted by Ben Baker on Jan 12th 2017
| Most of us are going to finance a ride when we get one. New or used, coming up with that kind of cash on the spot is so close to impossible you can see it on a foggy morning. |
| If you are looking at financing a ride, here are a few things you need to know and some things you should do. |
| NEGOTIATE THE PRICE |
| Hard to believe, but some people will pay the asking price. Don't. Negotiate with whoever is selling the ride. Do not be afraid to walk away, especially for a used bike. Online sites are packed with used bikes for sale every day and you can find one you like close by. |
| When buying a new bike, understand the Manufacturer's Suggest Retail Price (MSRP) includes a huge profit for the dealership. Negotiate. I you don't get the price you like, go to the next dealership. |
| SHOP THE LOAN |
| If you buy a new ride, the manufacturer will offer financing. Ask about the interest rate. Sometimes the finance department can beat a bank loan by a lot. Sometimes your bank or credit union can offer a lower rate. |
| Ask about early payment penalties. If there's a penalty for early payoff, don't do it unless you also get an amazingly low interest rate. |
| Credit unions often offer better interest rates than banks from what I've seen. Depending on your relationship with your bank, you may be able to get a better deal there. |
| Call several places and ask what interest they charge for a motorcycle loan. A lot of places will want your Social Security number before giving you an interest rate. Don't give the number. I explain why below. If the business doesn't tell you the interest rate, hang up and call another place. |
| Unfortunately, the interest rates for motorcycles is generally going to be higher than for cars. "The thinking behind this is if you are struggling financially, you are most likely to put available funds towards high priority items first – your mortgage, daily bills, etc. – and your motorcycle loan could fall into default as a result," write Kayla for the Ready for Zero Blog. |
| Bankrate suggests trying for a personal loan, instead of a loan with the bike as collateral. A personal loan, if your credit is good enough, can carry a lower interest rate than a bike loan. The article gives some excellent reasons for a personal loan. |
| CREDIT SCORES |
| Here are two things to know about your credit score. |
| 1) When someone checks your score, that causes it to go down a little bit. Makes no sense, but there it is. So, don't fill out a credit application until you get the price you are willing to pay and the interest rate you want. Never give up your Social Security number until you are ready to close the deal. |
| 2) Your score varies. I checked mine with the three credit score agencies and there was a 125-point difference between the three. Yes, this too makes no sense. |
| Here are the three credit agencies: TransUnion, Experian and Equifax. |
| You'll have to pay to get a copy of your credit score. But you can get a free copy of your credit report once a year. The report shows how you are paying off your debts. |
| BUDGET |
| Of everything you'll do when financing a ride, this is the easiest. Here's a loan calculator to help you decide what your payment should be. Just make sure your payment is something you can accord. |