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Motorcycle Loans Made Easy
You don't want to be stuck with an 'Upside Down' Motorcycle Loan.
It means you owe more on the bike than its actually worth. Motorcycles can depreciate rapidly after being taken from the showroom. Many buyers find them paying more for their loan than the bike is valued for.
Motorcycle buyer's can find themselves in 'upside down' loan situation after just 48 months. Especially when loans are taken without a down payment. Your lender will know what interest your situation calls for, and this rate will make a big difference. Your lender may decide between a primary interest or pre-computed, or simple interest.
Pre-computed interest is probably the worst situation for a motorcycle buyer to be in. Most of the interest is paid off with the first 24 months. During this time hardly any of the payment is towards the principal. Since statistics show that the average motorcycle owner trades in every 18-24 months, loans with pre-computer interest do not mix. In this situation the owner may find themselves with a motorcycle loan turned 'upside down'.
Motorcycle loans with simple interest are more beneficial for buyers. Simple interest accrues on the balance of the motorcycle loan. The downside is that any motorcycle loan period extending more that 48 months can turn 'upside down'. Down payments should be made right away.
A motorcycle that causes an 'upside down' loan does not have to be surrendered to the lender. A repossessed bike will still require you to pay back the remainder of the loan even if the bike was sold for way less. The lender will probably just tack on extra fees for putting the bike in auction. You'll kick yourself for having to make monthly payments on a bike you won't be riding anymore.
How to avoid 'upside down' motorcycle loans? Three steps to a better future with your motorcycle:
1. Choose a lender that offers a loan with simple interest. Avoid lenders who use pre-computed 'Rule of 78' interest calculations.
Make the down payment on the motorcycle loan.
3. Avoid motorcycle loans that extend past 36 months.
When you need a motorcycle loan, these three steps will help you know which one to trust. Don't get stuck in the world of 'upside down' motorcycle loans.
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