check out the fine print before choosing 72 month motorcycle loans...
Looking for 72 month motorcycle loans? If you are then the reasons you have for doing so may cost you in the long run!
The majority of people who enter the motorcycle buying process look for a 72 month motorcycle loan for the purpose of lowering the monthly payment of their motorcycle purchase. This is fine as far as it goes, but the problem arises when the motorcycle loan you purchase is calculated using the Rule of 78 method.
Many motorcycle lenders associate greater risk with a 72 month an 84 month terms and look to take advantage of motorcycle buyers with higher interest rates and the Rule of 78 interest calculations.
The rule of 78 is bad news on motorcycle loans. It is a method used by lenders supposedly to protect themselves against the long term loan which forces the loan purchaser to pay off mostly interest in the first 36 months of the loan. Consequently, you are paying very little towards the principal borrowing on your loan during the first 36 months. This can really hurt you if you sell your motorcycle because you will likely find your motorcycle is worth much less than you owe.
How likely are you to sell your motorcycle in the first 36 months of the loan period? Only you know the answer to that, but if you buy motorcycles at regular intervals, or you commute with your bike on a regular basis, beware!
Bottom-line, if you want a 72 month term be sure to find a motorcycle lender that uses simple interest. Simple interest calculations mean that you are paying off your loan plus interest throught the period of the loan.
In addition, be wary of motorcycle lenders that have substantially higher interest rates just because the term is longer. If you are forced to use a motorcycle lender that charges a higher interest rate for longer terms, use your credit history to negotiate a better interest rate.
It is highly recommended that before you apply for motorcycle financing you fully understand your credit history. Get a copy of your credit report from each of the three credit agencies (Equifax, Experian, Trans Union). Understanding your credit will help you tremendously in negotiating a better interest rate.
Copyright Motorcycle parts accessories and more, Michael Holmes 2004
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