How to Get a Motorcycle Loan

Are you in the market for a motorcycle? Maybe you've already found the right model at a dealership. Before you buy, be sure you have your finances in order. Being approved for a motorcycle loan is much like getting a car loan. The only difference is that fewer lending institutions make motorcycle loans.

First, check your credit rating. Thanks to the Fair Credit Report Act, you can check your credit rating for free once every 12 months at each of the three national consumer credit reporting companies: Equifax, Experian, and TransUnion (links).

Be sure that everything on your credit report is correct. If you have credit cards you no longer use, cancel them so you don't have too much open credit. If the credit report is still listing debts or delinquencies that have been paid off, call the company right away and have it corrected. You don't want any red flags.

Think about in the cost of other associated items, such as registration, insurance, maintenance, and protective gear. You need to be able to pay for all these things as well as make your monthly loan payment. Shop around for your motorcycle loan to get the best deal before you shop for the motorcycle itself. You don't want your heart set on a bike that costs $10,000 more than you can afford to pay.

Getting your loan in advance will also stop you from getting financing through the dealership, which is never a good deal. Watch out for special promotional loans at the dealership-these usually have a great rate for the first 12 months, then skyrocket. Unless your credit is so bad that you can't get a loan elsewhere, be prepared to walk into the dealership with your loan already secured.

When talking to a lender about a motorcycle loan, ask the same questions you would for a car loan. Is the rate fixed or variable? Could the rate change in the future? What are the administrative fees? Are there penalties for early repayment? What happens if a payment is late? Does the interest rate go up if payment is more than 30 days late? 60 days late? Let them know you don't plan to ever be in that situation, but it's important to understand all possible penalties.

You might also find a good motorcycle loan online. Many online finance companies don't require an application fee. Some require a down payment, but you should be planning to make a down payment already. Online loans can usually offer a lower APR. Shopping online saves time, money, and lets you compare options quickly.

Online loans usually have a 12-36 month repayment scheduled (rare case might go up to 72 months). Many companies calculate monthly payments using the simple interest method. Avoid loans with the rule of 78, where you are paying all the interest first. This could leave you in a bad situation if you decide to sell the bike before the end of the loan period. And don't accept a loan with a prepayment penalty.

How's their customer service? Will they help you with future questions? How quickly can they process your loan? Is there flexibility for how payments are made? Can you pick the payment due date? Can they automatically deduct the payment from your bank account? Can you check on the status of your loan online or by telephone?

Getting a motorcycle loan doesn't have to be painful. Do you research and find the loan that works best for you. Don't buy more bike than you can afford and make your payments on time. When the loan is paid off, your credit rating will look even better then next time you need a loan.