OneMain Financial: What to look for in a motorcycle loan
Jun 22, 2022
When it comes to financial products, there are plenty of options to suit different situations, and motorcycle loans can vary accordingly as well.
Knowing what to look for in a motorcycle loan comes down to two main things – purchasing options and affordability. Working out where you stand on each point can help steer you towards the right type of loan.
Look at the purchasing options
Taking out a motorcycle loan directly from the bike dealership or manufacturer can mean that you are tied to a secured loan that can only be used to purchase a brand new model of bike.
Whilst a secured loan can sometimes offer lower interest rates, it’s important to understand that this is only because the loan is ‘secured’ against your new motorcycle. By using your motorcycle as collateral, the lender lessens the risk to themselves in case you default on payments. If you miss a repayment on a secured loan, the lender will repossess your motorcycle to cover the remainder of the money you owe.
By contrast, if you took out an unsecured motorcycle loan with a traditional lender, you get a much wider range of options for how to best use your money.
An unsecured loan can also be used to purchase a brand new motorcycle, but you can also use the funds to purchase a second hand or even classic motorcycle for sale privately. It can even be used to fund maintenance, repairs, and upgrades to your current bike and cover running costs or new riding equipment.
As it’s an unsecured loan, there is nothing tied to the agreement as collateral and no risk of any of your assets being repossessed.
Taking out a loan to finance the purchase of a motorcycle is a great way of making a large purchase more affordable. However, no matter what type of loan you choose, you will need to make set monthly repayments for the duration of the loan term.
Loans are generally offered over a period of 2 to 5 years, with the longer term providing more affordable monthly payment as the overall cost is spread across more months.
It’s important to understand that interest accumulates across the entire duration of a loan agreement, so the longer the loan, the more you will pay back in total. Shorter-term loans can have better interest rates, but the repayments are much higher and may not be as easy to manage.
What’s Best for you?
Deciding which type of motorcycle loan best suits you is easiest to work out when you have the options and numbers in front of you.
If you are only after a brand new motorbike and are confident that you can cover higher repayments, then a shorter-term secured loan from the dealership might be the best option for you. On the other hand, if you’re looking for something that gives you greater flexibility on your purchase and a more manageable repayment plan, then an unsecured loan from a traditional lender may be what you are looking for.
About OneMain Financial
OneMain Financial is the leader in offering nonprime customers responsible access to credit and is dedicated to improving the financial well-being of hardworking Americans.