A Complete Guide For How To Get Used Motorcycle Financing
One of the key factors you should consider when financing a used motorcycle is how you will purchase the bike. Will you be purchasing the motorcycle from a private party, auction or a dealer? The answer to this question highly impacts how you should approach getting a used motorcycle loan.
Individual Private Party and Motorcycle Auction Purchase
When purchasing your used bike from a private party or a motorcycle auction, you will need to secure your financing and get cash in your hand before the bike is purchased. Therefore, your best options are working with online motorcycle lenders, local banks, or credit unions.
When working with online lenders, local banks, or credit unions you will normally be applying for a personal loan. The reason you will apply for a personal loan is that most lenders do not have a specific finance product called used motorcycle loans. Don’t be alarmed by the name personal loan. It is simply a name lenders use to group types of loans that are not super popular like mortgages or auto loans. A personal loan acts just like your standard installment automotive loan and has a simple interest calculation with a competitive interest rate.
For online motorcycle lenders when you are approved for a personal loan, a check will be issues in your name and sent to you overnight mail. This provides you the funding to purchase the used motorcycle from an individual or private party.
With local banks or credit unions, you will also get a check once you are approved. The only difference is that local banks and credit unions are normally slower at getting you funding than online motorcycle lenders.
One of the advantages of an unsecured personal loan is that many times the bank will not require a title lien on your bike or ATV. This comes in handy if you sell your motorcycle or ATV down the road because you will not have to wait for the lender to issue you a formal lien release letter or your title.
When working with dealers you can still choose to buy with a personal loan from an online motorcycle lender, bank or credit union. However, you will also have another option since most dealers have access to offering used motorcycle loans.
One thing to remember when working with cycle dealers is that the dealer may get kickbacks from the lender. Normally dealers get kickbacks for offering you loan programs that are at a higher interest rate then you could get from an online lender, local bank or credit union. Therefore, if you get used motorcycle financing via a dealer it is highly recommended you ask lots of questions.
Here are some questions you should definitely ask:
1. Are there prepayment penalties for the loan you are applying for? Does paying off the bike early subject you to any additional charges? If yes, you will probably want to avoid this finance agreement.
2 What is the actual interest rate?
Make sure you get the Annual Percentage Rate (APR) because it is the best way to measure your total cost on the purchase. The interest rate you are quoted will depend on how much you shop around and your past credit history. Getting approved on the web may help you get a much better APR than at a local bank.
3. Should you get an advantage for trading in your old motorcycle?
Normally trading in your old bike does little to help you. Therefore, in today’s age it is recommended to sell your old bike through a private listing. Check your local paper or cycle trader online.
If you do sell your old bike the cash you get from the sale can sometimes be beneficial in getting better terms. Be sure to let the lender know if you are willing to use the cash for a down payment. This may help your quoted interest rate.
4. How much is the actual purchase price?
The answer to this question is very important because when you get a used motorcycle loan you will want to be sure the dealer does not add extra fee (such as document fees, administrative fees) into your loan.
Be sure to check the line items on your contract to make sure the actual purchase price is the actual value on the contract.
5. Is a deposit necessary with your purchase?
If a deposit is necessary to hold your used motorcycle in a dealer be sure you find out if you can get the deposit back if you change your mind. In addition, if you are going to pick up your bike within 30 days, it is wise to put a deposit on your credit card. This way if there is an issue with getting your deposit back you can dispute it through your credit card company.
Be sure you ask about the line items on your loan contract.
6. What is the exact price to the penny you are paying?
7. What is the exact amount being financed?
8. What are the total interest charges?
9. What is the exact APR on the contract?
10. What is the exact amount of each payment?
11. What is the total number of payments?
12. Has the down payment been included as part of the contract?
Overall your used motorcycle financing options will highly depend on how you choose to buy your used bike. Online motorcycle lenders offering personal loan may offer the quickest turnaround with good annual percentage rates, but banks, credit unions and dealers can also be good sources.