How to Secure a Motorcycle Loan

With gas prices rising, coupled with that four-hour roundtrip commute, you have finally made up your mind: You have decided to purchase a motorcycle. Your rationale is that you will save money on gasoline and save time by skirting around stalled traffic.

In shopping for a motorcycle loan it is important to note there may be a few differences in securing a competitive interest rate. As with most other purchases, the best loan can be obtained by shopping around and being acquainted with the entire motorcycle loan process.

Interest Rates

When beginning your search for a motorcycle loan, it is important to realize that typically these loans have a higher interest rate. Added percentages for a motorcycle loan range from two to three percent higher than other vehicle loans.

The rationale for this higher interest rate is based on the perceived higher risk factor of the lender. This higher risk factor includes the unfortunate, but practical, reality that if in an accident you are likely to be injured to the extent that paying off the motorcycle loan may be difficult.

Also, who you purchase your motorcycle from is an important component to securing the best interest rate. Generally, motorcycles purchased from dealers will equate to a lower interest rate. Higher interest rates will be incurred when purchasing used motorcycles or buying a motorcycle through an individual.

Shopping Around

When hunting for the best motorcycle loan it is best to shop around. This time and effort will save you money by allowing lenders to compete for your business. The internet is often a good place to start this process; by searching on the web several quotes can be received. This process can be done from your home over a minimal amount of time. Also, don't forget the competitive interest rates offered by credit unions.

Questions regarding the motorcycle loan would include any application fees, down payments required, are there any penalties incurred for paying off the loan early and is the process quick? One other consideration is that some lenders require that the monthly payments be made by automatic withdrawal process from your financial institution. This process sometimes nets you a lower interest rate. Great care should be taken in considering this process as insufficient funds may increase your interest rate due to non-payment.

Other Tips

When taking that final step in your motorcycle loan process, remember other associated costs involved in the purchase of a motorized vehicle. These costs include tax, registration, and title. Also, if purchased from a dealership, many companies offer extended warranties on various systems within the motorcycle. You may choose to borrow money that covers the whole purchase package.

Finally, many lenders will offer you a guaranteed loan amount for a certain number of days. The advantage of this locked in amount guarantees you that amount of loan at that interest rate and empowers you to deal with the seller of the motorcycle.

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