Learn about financing and why Honda motorcycle financing and the Honda credit card are not always the best alternative.
Looking for Honda motorcycle financing? It is likely if you enter a dealership you will be offered a Honda credit card or Honda financing. However, before you enter into an American Honda financing agreement make sure you explore this page to understand the advantages and disadvantages.
American Honda Financial Services offers two types of financing: fixed installment loans and Honda credit card loans.
Both are covered below.
Honda Installment Loans
An installment loan is by far the best type of financing on the market. A typical installment loan offers a fixed interest rate, fixed payment and fixed term for the loan. However, be careful with installment loans because not all installment loans are the same. The reason for this is due to Rule of 78 versus simple interest. Essentially, Rule of 78 installment loans are in favor of a lenders like American Honda Financial Services, a bank or a credit union. The reason for this is that more of the monthly payments in the early years of the loan go towards interest charges and not to pay down principal.
Do not be fooled, Rule of 78 will greatly affect you if you pay off your loan early or if you decide to trade in your motorcycle after 1 to 2 years. As a result of Rule of 78, many buyers find themselves up side down when they try to trade in their motorcycle for a new one. Up side down means you owe more on your motorcycle loan than the motorcycle is worth.
By far the preferred method of installment motorcycle financing is an installment loan that uses a simple interest calculation. A simple interest calculation has a steady interest calculation throughout the term of the loan that does not penalize buyers in the early years like Rule of 78. Whether the loan is though your bank, credit union, or American Honda financial services, be sure it uses simple interest.
One thing you should consider when getting a loan is to get as many quotes as possible. This will provide you with the ability to compare offers against one another and against Honda motorcycle financing offers. Many people find that online it is easy to get pre-approved quotes in minutes. Online you will find most lenders offer simple interest installment loans so you do not have to worry about Rule of 78.
Honda Credit Card
American Honda motorcycle financing does offer Honda credit card financing, but it is a partnership between American Honda Financial Services and GE Capital. Therefore, your motorcycle loan on the Honda credit card is actually with GE Capital.
For most people credit card financing is not recommended because it typically has a low interest rate with a short term like 12 months and then the interest rate increase to 17.9% APR. This is especially true of American Honda motorcycle financing since they frequently promote 1.99% APR for 12 months or 6 months no interest.
For some people credit cards like the Honda credit card can be beneficial in certain cases. For example, if you are purchasing a dirt bike for $2200 a 12 months no interest promotion could be beneficial if you can afford to pay off your motorcycle in 12 months. Of course this will be harder to do the more expensive Honda motorcycle you purchase.
A good rule of thumb in deciding if you should used the Honda credit card or a installment loan is to consider the price. Typically, for big ticket purchases it is best to never use the Honda credit card unless you can pay it off completely at the end of the short term offered.
If you would like to get pre-approved for an online motorcycle loan in minutes check out our resources below.
Honda Motorcycle Financing
High Risk Motorcycle Loans - Get A High Risk Motorcycle Loan
You will find these lenders easy to deal with and highly professional. If for some reason you can not get an approval, try a credit report repair agency.
Motorcycle Loan Poor Credit - Lenders Of Poor Credit Motorcycle Loans
If you have tarnished credit you are not alone. Your credit honda motorcycle financing report should show no late payments for at least 6 months. Once you finally do get approved you can change you credit rating by making your monthly payment on time each month. Getting a poor credit motorcycle loan is totally possible, but sometimes it takes a little more persistence than if you did not have credit problems. Your credit report should show that you have had no late payments for at least 6 months.
Military Motorcycle Loans - A Guide Of Online Lenders
Since most motorcycle lender's approval systems are automated, the system automatically generates a decline or higher interest rate if the address does not match between your credit report and application. Online it is also easy to compare interest rates. honda motorcycle financing
