How Long is a Motorcycle Loan?
NEW YORK, June 1, 2022 (Newswire.com) - iQuanti: There are many things to consider when looking to take out a motorcycle loan. Aside from the initial thought of how much you need to borrow, it's also important to look at the interest rates and the repayment term. The longer a motorcycle loan is, the more it can cost you overall.
Where to Find Your Finance
Taking out finance to cover your new motorcycle purchase directly from the dealership or manufacturer will usually tie you into a secured loan with repayments over a 3-5 year time frame. Non-traditional lenders often offer a secured loan as it means there is less risk for them. With a secured loan, your motorcycle is the asset used as collateral. If you fail to meet the loan repayments at any point, the lender can repossess your bike to cover the remainder of the money you owe them.
One alternative to taking out a secured loan with the dealership is to take out an unsecured personal loan with a traditional lender or financial institution.
A traditional lender can provide unsecured personal loans that can be taken out over 2-5 years. The main benefit of taking out an unsecured loan is that the loan money is paid directly to you. You then have the choice to not only purchase a new or secondhand motorbike but also use it to fund bike maintenance, repairs or new riding equipment. In addition, as it's unsecured, your motorcycle is never at risk of being repossessed.
Short Term vs. Long Term - What's Best?
There are pros and cons on both sides when choosing to take a short-term motorcycle loan versus a long-term motorcycle loan.
Taking out a short-term loan means you will be charged less in interest as it doesn't accumulate over the longer term. This would make the loan cheaper overall, but it will mean having much larger monthly repayments.
If you've taken out a secured loan over a short term, the monthly repayment can take a sizable chunk out of your budget. It's worth considering if you could afford these larger repayments if any unavoidable money issues (such as a cut in work hours or a considerable medical expense) came up. If you miss a payment on a secured motorcycle loan, the lender will repossess your motorcycle.
Choosing a long-term loan would mean that you pay more in total over the length of the loan, but the monthly payments are much more manageable.
Having a lower monthly repayment allows for more breathing space in your day-to-day finances which can be preferable to many people. Even if you have taken a secured loan, as the monthly repayments are lower, it's less likely that a situation would come up where you couldn't afford to pay the loan back and wouldn't risk having the bike repossessed.
The bottom line
As with anything related to personal finance, the term that you should take a motorcycle loan over is unique to your situation - there is no option that is universally better; it depends on your current financial situation and how you prefer to manage your money.
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Source: iQuanti, Inc.