Purchasing a motorcycle without taking out financing can take months or even years of saving up before you will be able to purchase, depending on the cost of the model you are buying. Meanwhile, by taking out a motorcycle loan, you can get one right now, allowing you to reap the benefits of owning a motorcycle without having to wait for your savings to catch up. If you are interested in getting a motorcycle loan Singapore, be sure to check out some of the important things that you should know about before taking out one. Without further ado, let’s start:
The most popular methods of acquiring motorcycle financing
Lending partners of the dealership
One of the more common methods of obtaining financing for motorcycles is through a partnership with a motorcycle dealer. Motorcycle dealers generally have partner banks, loan companies, and financing institution who offers to finance for customers interested in getting a motorcycle with the dealer using loans.
On the other hand, motorcycle shops generally get huge kickbacks from loan companies, enabling the dealer to increase the yearly percentage rate to have an increase for themselves as earnings. The motorcycle dealer might recommend you to get accessories and other extras to be included in the coverage of your loan, allowing them to inflate your loan even further. They might even suggest you a financial loan that is good for their profitability but is bad for you personally.
The easiest method to stay away from common motorcycle loan traps by dealerships is by looking for loans outside of the dealership. By doing so, you will be able to find and compare loans, allowing you to choose the best loan for you personally. It will not harm your credit score to fill out an application to numerous loan companies as long as you do them all in the same time period.
The dealership itself
When a dealership doesn’t have a partner, it’s usually because they offer their own financing plans. However, take caution when doing so. Some dealerships who offer these are predatory and imposes very high-interest rates that sometimes it is best to just get your financing from a certified lending company. If getting a loan from a motorcycle dealer itself is your only option when taking out a loan, it is recommended that you just save money to buy the motorcycle on cash. You can also just work to fix your credit rating so that you can get financing from a bank or a loan company instead.
A few motorcycle manufacturers offer their own financing firm that provides financing to their customers. An example of a motorcycle manufacturer that does this is Kawasaki. It is better to get your financing from the manufacturer of the motorcycle itself rather than from dealers since the manufacturers obtain their income primarily from the sales of the motorcycle, not from the interest earned by the loan. As such, they are much more generous when it comes to the terms and interests of your loan.
You can sometimes get a much better deal by refinancing your loan. This is especially true if your credit score has increased from the time that you applied for the motorcycle loan. If you have a higher credit score today, you may be eligible for a loan that features much lower interest rates compared to what you have on the motorcycle loan. If that is the case, it is a good idea to take out a new loan, pay your existing motorcycle loan, and save money on interests.
You can seek out refinancing loans from online loan providers, banks, and other companies.
Factors that lenders consider before approving your loan
In this section, we will discuss some of the factors that lenders consider when approving (or rejecting) your application. Treat it as a guide to see what things you have to improve to increase the chances of your loans being approved.
Credit score and credit history
Your credit score is an indicator of how well you have paid your other loans in the past, whether or not you paid them on time, and if you spend them wisely. If the motorcycle loan is your first loan, your credit score might be non-existent. Other things that affect your credit score include your bills payment, credit card payment records, etc.
On the other hand, your credit history is the record of all the loans you had before. If your other loans have been settled in time, you will probably have no trouble in securing a motorcycle loan. However, if you have failed on many payments, or has filed for bankruptcy in recent times, your loans might be rejected.
Your debt and income ratio
Did you know that rent, bills payment, mortgage, as well as other recurring payments are considered as debt by financing companies? If your “debts” are higher than your income, you may have a hard time getting your loans approved. Before taking out a motorcycle loan, be sure to settle some of your bills and monthly payments, or wait for them to end so that your debt to income ratio will have a chance to improve.
The down payment you are willing to pay
Having an excessive down payment will appear good on your application since it means that you handle your money well. If you have a substantial amount dedicated for the down payment, it will be easier to get your loan approved.
Are you looking for a loan for your motorcycle purchase? Or maybe you want a loan with low interest for refinancing on your motorcycle loan? Take one now from A1 Credit. They offer competitive rates and fast approvals. Apply now for a loan here or give them a call at 6336 0833.