Motorcycle Loan Basics

Understanding the basics of motorcycle loans will save you from many of the common errors that people make when financing the purchase of a motorcycle. While motorcycle loans are very similar in nature to auto loans, the public as a whole has less experience with this type of loan. This lack of understanding leads to the same pitfalls time and again. Many motorcycles are repossessed because people are not careful when selecting loans.

Avoid Credit Card Loans

Many motorcycle companies, such as Honda and Suzuki, will offer a private label credit card for you to purchase your vehicle with. These cards are actually revolving credit lines instead of typical installment loans used for vehicle purchases. Many first-time bike buyers fall into this trap. The cards are offered with low to no down payment and low introductory rates. What is written in the fine print, though, should make you turn the other way. The rates can adjust at any point during the loan term, and they usually sky-rocket after the initial period is over. Opting for an installment loan will keep your payments more consistent over time.

Loan First, Bike Second

Motorcycles are typically luxury purchases rather than necessities. When people shop for motorcycles, they are often after a particular brand, color or style. Often, they have their hearts set on a particular "dream bike" for sometime. Once it is time to purchase the bike, the loan may be astronomical. Motorcycles are less expensive than cars, but consider this is a secondary vehicle in most cases. Financing yourself into debt does not make sense for such a purchase. It is a better idea to go to various motorcycle sales offices and seek loans first. After determining the loan that will work for you, you can then consider bikes within that range. This practical approach is often used when purchasing autos but used less frequently when shopping for motorcycles. The rate of repossession of motorcycles may be higher because of this irresponsible tendency.

Budget for Insurance Payments

Depending on where you live, your motorcycle insurance payments may add a significant chunk of change to your monthly cost of ownership. You will need to have motorcycle insurance just like you will need car insurance. Some companies offer affordable insurance for recreational vehicles, while others assess high penalties due to the higher chance of accident associated with bikes. Bikes are, by nature, less safe than cars. It is also not uncommon for insurance companies to engage in unwarranted discrimination against individuals who ride motorcycles based on the assumption that motorcycle riders engage in risky behavior. In any case, you need to budget for the cost. The most cost-effective way to do this is usually bundling the product with your existing car insurance. If you will be using your vehicle as your primary mode of transportation, you will need a higher limit on your insurance and likely a lower deductible. Motorcyclists are often the victims of liability lawsuits when crashes occur. Again, the stigma on the road is that motorcyclists are risky drivers who pose hazards to those in automobiles.



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