Many riders finance the purchase of their motorcycle, but do we really get the best finance deal possible?
And just as importantly, do we know the easiest way to go about the sometimes complicated process of applying for finance?
We tracked down some advice from some experts.
Find out your credit score
A credit score is a number that shows banks, lenders and even telephone providers to figure out your financial health. The higher the score, the better off you’ll appear to lenders.
People often have low scores because they have defaulted on a loan, didn’t pay a bill on time (over 60 days) or made some other error.
Most lenders will approve your loan based on your credit score. A cleaner credit history means you might get better choices and lower rates if you know how to negotiate well.
You can check your score yourself – and the best thing is it’s free. Look at MoneySmart for more details.
Getting your paperwork together
Your lender or broker will do a credit check when you apply, but you should have as much evidence as possible before committing to one lender. You should have:
- Recent payslips (or profit and loss statements if you’re self-employed)
- Bank statements
- Residential history
- Employment history or references
- Other evidence of good financial conduct
This “evidence” is to show your prospective lender you can be relied on when it comes to paying them back.
Know your numbers
Going into a dealer or broker’s site (or office, if you prefer) without knowing the answer to this question: “How much are you looking to spend?” is a bad idea.
You should know how much you could afford each month in your motorbike loan repayments, insurance, fuel, and maintenance. You also need to factor in registration and other on-road costs such as stamp duty and compulsory third party insurance.
Knowing these figures beforehand inspires confidence in yourself to stick to a budget, and in your lender.
“Having all the numbers in front of you does help you in two big ways,” says finance expert and Savvy CEO Bill Tsouvalas.
“It proves to your broker that you’re a responsible borrower, that you can live within your means. It also may entitle you to pre-approval, which puts a cap on what you can spend. This gives you leverage when negotiating with a dealer or seller.”
Comparing motorcycle and car loans
Getting a motorcycle loan is like obtaining a car loan. You might want to take advantage of the benefits a motorcycle loan offers.
People who are looking to buy a new car but have poor credit can turn to other finance options, such as bad credit car loans by Naked Loans or from any trusted lending company. The same goes for getting a motorcycle. If you fail to obtain approval for a motorcycle loan because of bad credit, you can go for a bad credit motorcycle loan from a lending company. But before you apply for one, search for a lending company with an impeccable track record. To find out whether they hold a good reputation, you can read online reviews.
Most often than not, lending companies that offer bad credit car loans also provide bad credit motorcycle loans. Of course, you can expect higher interest rates than those of traditional bank auto and motorcycle loans. However, they’re still reasonable because of the risk lending companies take to offer financial assistance to people with a poor payment history.
In addition, you’ll reap the benefits of getting a bad credit auto or motorcycle loan. For instance, you can apply for a bad credit motorcycle loan to help improve your credit rating by paying on time. In this case, a motorcycle loan is easier to pay because motorcycles are generally priced lower than cars.
Newer bikes can cost less?
It might seem like a bit of a puzzler, but a newer bike can actually cost you less in interest than buying old. Older bikes have low value, and lenders are hesitant to fund them.
A new bike, with new safety features and fuel economy means you save money on fuel and you’ll get a lot more life out of the bike.
Before applying for a bike loan, seek the advice of a financial professional.