The bottom-line is that it is always best to shop for a motorcycle loan before entering the showroom.
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 today’s 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.
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.
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:
• Is the interest rate fixed or variable? If fixed how long will it be fixed for?
• Are there circumstances that can make the interest rate on the motorcycle loan change in the future?
• What happens if a payment is 30 days late? Does the interest rate increase?
• What happens if a payment is 60 days late? Does the interest rate increase?
• How long is the term on the motorcycle loan?
• 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 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?
• Are there any administrative fees to get the motorcycle loan and if so how much are the fees?
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) 2004, by Jay Fran This article may be freely distributed as long as the copyright, author's information and an active live link to http://www.motorcycle-financing-guide.com is published with the article.
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