Motorcycle ownership seems to be at it's height of popularity with there being a variety of people riding, from college students to bank presidents. No matter what financial situation you're in, you'll find that motorcycle loan rates do tend to be higher than traditional loan rates because lenders view motorcycles as a luxury item. But it is still possible to get a low rate on a motorcycle loan. If you have a good credit history, meet income requirements and have a down payment, you could qualify for the best in motorcycle loan rates. Whether you are a low risk to a lender or have a history of bad credit, there are a variety of options available to you when you are seeking a motorcycle loan.
Manufacturer financingThe advantage to this type of financing is that it allows you to buy the motorcycle, any accessories and clothing all at once without having to take out separate loans.
Many manufacturers from Harley Davidson to Honda offer their own financing programs. These programs are similar to a credit card in that they are a revolving line of credit.
Many times, this line is offered at an attractive introductory rate with little or no payments for a pre-set time period. After the introductory period, however, you can expect to see a sharp increase in interest rates. It is important if you choose this route to set yourself up on a payment plan so you can get the motorcycle paid off in a certain amount of time. You will only be required to pay the minimum payment but it is smart to pay more to avoid excessive interest charges.
Motorcycle dealer financing is very similar to car dealer financing. The motorcycle dealer has a variety of lenders that they are able to search out to find the best deal for you and your situation. The dealer will add a mark-up to the interest rate they receive from the lender and this is where their profit comes into play. Because of this, it is always possible to negotiate the motorcycle loan rates with the dealer.
Many banks, credit unions and online lenders also offer motorcycle loans. You can expect to pay from one to three points more than you would for a vehicle loan. This will be true no matter where you get your loan. Online can be a great place to search for motorcycle loan rates as you will have a wide array of options available to you at the click of your mouse. It also helps to have an idea of rates and terms when you enter the dealership so you can decide on the best option for your situation.
Personal credit card
If you have a personal credit card with a high limit, this is also a source of financing for you. Be sure you do not exceed your limit with the purchase or you can incur costly over-the-limit fees. This could be an excellent option for you if you have a low interest rate credit card. Once again, be sure to set yourself up on a payment plan. If you only make the minimum payment, you will incur unnecessary interest charges that could amount to thousands of dollars.
Home equity loan
If you own your home, a home equity loan can also be your best source. With home equity loans, you can also avoid the higher motorcycle loan rates. Home equity loans and lines of credit generally carry low rates because they are secured by real estate. In fact in many cases, this will be the way to get the lowest rate on your motorcycle. There are advantages to this type of financing including possibly being able to deduct the interest on your income taxes. The downside to this is if you are unable to make your payments, you will risk losing your house.
Most home equity loans also have a minimum loan amount that is typically $10,000. Along with this, you may have closing costs associated with this loan. Some lenders offer special no closing cost loans under certain circumstances.
If you are buying a used motorcycle from an individual, it is possible that you will find a seller that is willing to finance it for you. In this transaction, the seller may ask for a larger down payment. Be sure that all of the terms of the loan are in writing to protect both you and the seller. You can expect to pay higher motorcycle loan rates with seller financing.
When you are on the road to owning a motorcycle, be sure to investigate all of your financing options to find the best motorcycle loan rates for you. There are lenders out there for every situation with many options to choose from. Choose the best deal for you to make your dream of owning a motorcycle a reality.