When it comes to buying a new or used motorcycle, there are many factors that can influence the total cost. One of the most important considerations is the loan rate, which determines how much you’ll pay for the motorcycle and interest-related fees over time. Depending on your situation, small differences in rates can make a big difference in your total costs. Here are some tips to help you find the best motorcycle loan rates.
Credit scores and income are critical in determining a borrower’s ability to qualify for loans, and can impact the rates you’ll receive. Getting preapproved before shopping for a motorcycle will let you know exactly how much you can borrow and what your payments will be, so you can plan accordingly. It will also position you as a more serious borrower and may speed up the approval process.
Motorcycles are more expensive than standard automobiles, which makes them higher-risk investments for lenders. Combined with the fact that motorcycles are more vulnerable to damage and theft, this can increase the risk of not repaying a loan, resulting in a higher risk-based APR. Lenders typically have lower minimum credit score requirements for motorcycles than for auto loans, but the amount you can borrow will still be limited by your personal assets.
It’s important to crunch the numbers to make sure you can afford a motorcycle and the related expenses, including insurance, protective gear, and motorcycle classes. You can use a budget calculator to help with this. Then, make sure to factor in other debt obligations such as student or personal loans, and your other monthly expenses such as utilities and food.
The type of loan you choose will also affect your interest rates. For example, an unsecured personal loan is often a better option than a secured bike loan because it doesn’t put your bike at risk of being repossessed in the event of nonpayment. In addition, personal loans have fixed terms that allow you to lock in a predictable monthly payment ahead of time.
In addition, if you have bad credit, consider finding a cosigner who has good credit and will be on the hook for repayment in the event of default. This can help you qualify for financing and may offer a more favorable rate since the cosigner’s credit is on the line. Also, remember that even one missed or late payment can hurt your credit score and could lead to lender repossession, so make sure you prioritize on-time payments. Lastly, check rates with your current financial institution to see what they’re offering, or consider going to an online lender that specializes in working with high-risk borrowers because they may offer low rates and quick application and funding processes.