When it comes to securing a motorcycle loan, many buyers fall into the same traps, regardless of whether interest rates are high or low or if there are end-of-year incentives. Here are four prevalent mistakes that motorcycle buyers often make when looking for a motorcycle loan.
Motorcycle buyers frequently make the same errors when seeking loans, whether interest rates are high or low or there are end-of-year incentives. This article delves into four common mistakes, such as not shopping for a loan before visiting the showroom, diving into unfamiliar loan terms, borrowing too much, and failing to ask the right questions. By understanding these pitfalls, buyers can make more informed decisions and avoid financial strain.
Many buyers make the mistake of visiting the showroom before determining how much they can borrow. For instance, there's no point in eyeing a $20,000 Harley Davidson if a lender is only willing to offer a $10,000 loan.
Once in the showroom, salespeople often pressure buyers into dealership loans with higher interest rates than those available from banks, credit unions, or online lenders. Salespeople aim for quick sales to secure their commissions, often pushing buyers into less favorable financing options.
Pro Tip: Always secure your loan before stepping into the showroom to avoid being swayed by high-pressure sales tactics.
Buyers often jump into loans without fully understanding the terms. Manufacturers frequently offer low-interest credit card promotions for short terms (12-24 months), which then balloon to much higher rates. If you can't pay off the loan within the promotional period, a slightly higher interest rate on a longer-term installment loan might be a better option.
Stat: According to Experian, the average interest rate for a new motorcycle loan in 2022 was around 6.5% for borrowers with good credit. Source: Experian
First-time buyers, especially younger ones, often overestimate how much they can afford. High-end sport bikes can cost between $10,000 and $15,000, stretching finances thin and leaving little room for insurance, maintenance, registration, or accessories.
Overextending financially can lead to a lack of funds for enjoying the motorcycling lifestyle or covering essential costs.
Stat: The average cost of motorcycle insurance in the U.S. is about $702 per year, but it can vary widely based on the bike and the rider's profile. Source: ValuePenguin
If you don't understand the loan terms, it's crucial to ask questions. Here are some essential questions to consider:
Pro Tip: Spending extra time understanding the loan terms and asking these questions can save you from future financial headaches.
By focusing on securing a loan before visiting the showroom, understanding loan terms, borrowing within your means, and asking the right questions, motorcycle buyers can avoid common pitfalls and make more informed financial decisions.
Stat: According to the Motorcycle Industry Council, the U.S. motorcycle market saw a 9.2% increase in sales in 2021, indicating a growing interest in motorcycling. Source: Motorcycle Industry Council
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