It is very important for you to understand that the motorcycle loans and the car loans are never the same, and so the criteria for borrowing and repayment may not always be the same, either. Lenders will decide on your creditworthiness depending on the credit scores that you bear even when it comes to the limited amount of the loan for motorcle. There are more risks of theft involved in case of a motorcycle, and the lenders often help you to avail the loan for motorcycle by allowing you to have a credit card.
Two Basic Loan Types
If you are looking forward to shop for a good loan for motorcycle, you will do well to know the details about the loan types and the concerned details.
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There are two basic types of motorcycle loans that are secured installment loans and the private label credit card loans.
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The secured installments will have to be paid over a fixed period of 36 months, 60 months and so on.
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In case of the private label credit card loan, the features of the loans are unsecured, and the motorcycle is not used as collateral.
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In the second type, the lender takes on more risks, and therefore, the rate of interest is much higher than the first type.
Know The Technicalities Before You Apply For The Loan:
The private label loans are usually offered by motorcycle dealers or manufacturers and also have high penalty rates attached to it in case of non-payment. At a glance, such loan for motorcycle appears attractive to the buyer, but they have intricate charges and complexities that keep varying from one loan to the other. The late payment charges can be more when compared to the on-time payment of interest. The ultimate cost of the vehicle far exceeds the normal price than what is projected in the promotional and advertised form.
Calculating total costs
It is a fact that longer loan terms are actually a burden on you, as then the amount of interest you pay will be more than the actual price of the motorcycle, after the tenure is over.
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Check out on the actual loan for motorcycle rate and the time for which it is being projected. You should be keeping your eyes on how much you will pay in total.
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There are both long-term as well as short-term loans. You will find the short-term ones steeper and the installments costing you more each month.
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The long-term though appear to have smaller installments each month will add up thousands of dollars more to your cost.
Knowing The Actual Rates
For dealers, the sale of each motorcycle is only a small transaction made in their overall business. But the reality for the buyer is just the reverse with her or him having to bear the financial repercussions for years to come. There are financial kickbacks or commissions that are involved in each loan that is bought given by the lending institute. An instance is that the actual loan rate may be 3.99%, but the dealer sells it to the buyer at 8.99%.
Thus, it is the buyer that is the most vulnerable in the entire transaction process. It thus is imperative that you take someone with a rational sense so that she or he can read the fine prints concerning the loan even if you are lost in the excitement of buying a new bike. Moreover, always opt for the shortest term loan for motorcycle that you can afford to pay as motorcycles have depreciation costs that will give you very little resell value. It is better to compare the rates of interest from different online sites, before you want to avail a loan for motorcycle.