Five Questions To Ask Yourself Before You Finance A Motorcycle
If you are considering purchasing a new motorcycle, you may be confused on various aspects of the process. First there is selecting the bike that fits you. Then there are other aspects like financing, accessories, and motorcycle insurance which may not be on the top of your mind.
Most motorcycle dealers indicate that new cycle buyers are doing some homework on the bike before they buy. But with other aspects like financing, insurance, and accessories most buyers fall short of educating themselves.
To prepare yourself for the financing process ask yourself the following questions:
1. Do you have a budget? If you do not have a budget you should create one before you purchase a new bike. It is important to know how much motorcycle you can actually afford. You should include extra expense items in your budget such as gas, tires, accessories, oil changes, services, and motorcycle insurance. With insurance there can be differences in premiums depending on the model you purchase. Sometimes these premiums can cost as much as the bike itself.
2. Do you know your credit history? Your credit history plays a huge role in the interest rate you will obtain when financing a motorcycle. It is a good idea to get your credit report and credit score before you try to obtain financing. That way you know what the lender is seeing on your credit report and also if you find errors on your report you can correct them before submitting an application.
3. Did you shop dealers? Shopping around and doing your homework is the best thing you can do to find the lowest price on a bike. Check multiple local dealers. Also shop for financing by checking offers from local banks, credit unions and even motorcycle lenders online. You can finance through a dealer, but you may find a better deal elsewhere.
4. Have you considered how finance interest rates are determined? Motorcycle lenders compute your interest rate on a variety of factors. Normally, a lender reviews your credit score, debt to income, amount of credit card debt, price of the bike, past payment history and if you have a down payment. If you have maxed out credit cards, it is advisable you pay down your cards by at least 50% before submitting a loan application at a dealer. Online lenders and local banks do not look as heavy at maxed out credit cards when compared to dealer financing.
5. Have you thought about what you will do if you are declined? Changing a declined application to an approved application can be done. Normally you will want to find a co-signer, or have a substantial down payment available. If you choose a co-signer make sure it is a person you can trust and that the person has a good credit history for at least 5 years.
If you answered ‘no’ to any of the above questions, consider doing a little more homework before you buy your new bike. To ensure you do not subject yourself to financial disaster, it is very necessary to have a good understanding of the finance process before you buy your motorcycle.