If you are looking for an 84 month motorcycle loan be cautious about being caught up side down!
Finding a motorcycle lender that is willing to offer an 84 month motorcycle loan is much more common today than it was just 5 years ago. However, just because motorcycle lenders are willing to offer you an 84 month motorcycle loan should you consider it?
Typically, the most popular reason people take out longer terms is to lower the monthly payment to an affordable level. However, what many people fail to realize is that they may not want the motorcycle for a full 7 years. As a result, they risk the chance of being caught up side down when selling or trading in their motorcycle before 84 months.
Being caught up side down means the value of your motorcycle is less than what you owe on your motorcycle loan. This happens with loans that extend for long terms because the motorcycle value depreciates faster than the principal on the loan.
To make this worse motorcycle lenders associate longer term motorcycle financing with more risk. Therefore, lenders frequently use an interest calculation that penalizes motorcycle buyers if they pay off the motorcycle early. This calculation is called Rule of 78. Beware, if you get motorcycle financing with a Rule of 78 interest calculation it is easy to be up side down with an 84 month motorcycle loan.
The reason it is so easy to be caught "up side down with Rule of 78 is that you pay off mostly interest in the early years of the loan. As a result, very little of your payment goes towards principal. If you sell your motorcycle before 36 months it is likely you will owe more on your loan than your motorcycle is worth.
To prevent from being caught up side down with motorcycle financing look for a lenders that use a simple interest calculation. Simple interest does not penalize you if you decide to pay off your motorcycle loan early!
Above in our loan tips resource section, you will find top lenders that use
simple interest financing and fast approval.
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