Motorcycle financing: What’s the best of 2021?
Today’s article is for those who want to own a motorcycle, but cannot pay the full amount in cash. We will therefore deal with one of the most advantageous alternatives: motorcycle financing.
When you opt for a motorcycle loan, you borrow money from a bank and pay for that loan in monthly installments, with accrued interest. Therefore, attention is needed to choose the bank with the best conditions.
First, the most important
- Motorcycle financing is a great alternative to purchasing your own motorcycle.
- But budgetary control and a careful analysis of financing conditions are necessary.
- In this article, we’ll show you what to do to choose the best motorcycle financing.
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Best motorcycle financing: Our recommendations
- Ideal for buying Honda bikes
- The best for high-capacity motorcycles
- The best option for new and used
Hiring Guide: All about motorcycle financing
The motorcycle is one of the most desired vehicles, after all it is a practical vehicle, which takes up little space and is more affordable than the car. But paying for a motorcycle in cash is not an option.
Among the alternatives, motorcycle financing is one of the most outstanding. But, to be worth it, you need to take the time to compare and choose the best payment terms. In this Buying Guide, we will help you answer your questions about this.
How does motorcycle finance work?
Motorcycle financing works like a loan. First, you choose the model and make of the motorcycle you want to buy and then you look for a financial institution that provides financing for motorcycles.
If your loan application is approved, it is the financial institution that will pay for the motorcycle. That done, you start riding your new bike and then start paying for the financing directly to the financial institution.
The financing payment is made in monthly installments, for a certain period of time, all of this previously agreed.
So, even before closing the financing contract you will already know how much you will pay for in the end. And this is a point that deserves your attention, after all, as the financial institution is lending you money, you will need to pay it with interest.
Therefore, the amounts of the motorcycle financing installments may vary from institution to institution, since each bank proposes a different interest rate.
However, in addition, financial institutions have other rules of their own such as payment terms, the number of installments, the total amount to be financed and the form of financing.
The entry to be paid in a motorcycle financing is usually at least 20% of the motorcycle value.
One of the rules is that the vast majority of institutions only finance part of the bike’s value.
With that, it is necessary that you give an entry, that is, a part of the value of the motorcycle that must be paid in cash.
As much as it seems a complication, after all you will need to save the value of the entry to give in cash, the fact is that the larger the entry, the lower the interest and the values of the installments of the financing.
Can I finance a motorcycle without entry?
If, for some reason, you are unable to collect the entry fee, know that, yes, it is possible to do the financing to buy the bike without giving anything in advance.
However, not all banks offer 100% motorcycle financing. In fact, most financial institutions finance only part of the motorcycle’s value.
And when institutions offer full financing for the motorcycle, there are still some requirements and limitations, such as the fact that the motorcycle to be financed needs to be 0km.
Is it possible to finance a used motorcycle?
This will depend on the financial institution you choose, as there are banks that only provide financing for 0km motorcycles, while others also provide the loan for used motorcycles.
There may be restrictions on the time of manufacture and the model of the bike.
In addition, it is worth watching because, although you can finance a used motorcycle, depending on the financial institution there may be restrictions on the time of manufacture and the model of the motorcycle.
For example, some banks only finance 100% used motorcycles that have been used for up to four years.
Other financial institutions still place restrictions on certain motorcycle models that can be financed 100%.
Which is better: Consortium or motorcycle financing?
Both the consortium and the financing are alternatives for those who want to buy a motorcycle and pay in installments. But the similarities between these two forms of payment end there.
As we have seen, motorcycle financing, in general, requires you to make an entry, which requires further planning.
In addition, you will pay for the financing over a long period and with added interest.
To finance a motorcycle, you must also prove income and have a clean name.
That is, depending on your situation, you may or may not have motorcycle financing approved.
The motorcycle consortium is not a loan. In that case, you will join a group of people interested in buying bikes.
Then, each participant in the consortium group deposits a pre-established amount monthly.
Thus, every month the amount collected goes to one of the participants who is drawn and can use the letter of credit to buy the vehicle in cash.
Did you know that, unlike the consortium, if you give up or are unable to pay for motorcycle financing, you will not receive a refund of what has already been paid?
However, patience is needed because you can be drawn at the beginning of the consortium as well as at the end of the established period.
In addition, although there is no interest in the motorcycle consortium, there is an administration fee that is charged by the company that manages the groups.
Next, you check the differences between the consortium and the motorcycle financing.
How to get motorcycle financing?
As financing is a kind of loan, the financial institution will analyze your situation and may or may not approve the credit.
In order for you to increase your chances of having approved motorcycle financing, check out the expert tips below:
- Verify income: You need to prove that you are able to afford the payment of the financing installments. To do so, you can use a paycheck, bank statement or income tax return.
- Have the money in: This facilitates approval and improves the payment terms of the debt.
- Collect the documents: Some documents are required by all banks, such as ID, CPF, proof of residence and income.
- Keep your name clean: If your name is on the Credit Protection Service (SPC) or Serasa, you will have little chance of having an approved motorcycle loan. That is, it is necessary to have a clean name to finance the motorcycle.
Where to hire motorcycle financing?
As we have seen, to hire a motorcycle loan you must turn to a financial institution such as banks.
But there is also another way to finance the motorcycle of your dreams. Some manufacturers, for example, have their own banks.
The important thing is to ensure that it is a serious institution with a tradition in the market.
Hiring Criteria: How to Compare Motorcycle Financing
If you got here it is because financing the bike is your best option. But, as there are many variables that differentiate one financing from another, you need to analyze them carefully.
To help you, we have listed below the main criteria that you should take into account. Look:
- Financed amount
- Term and installments
Next, we’ll show you how you can analyze each of these factors.
The first step before hiring motorcycle financing is to run a simulation. Thus, it will be possible to know in advance all the items that interfere in the price and differentiate one financing from another.
With these data, you will be able to make a more accurate comparison and then you will be able to choose the best motorcycle financing according to your financial condition.
Also note the interest rate charged on motorcycle financing, which is what actually increases the final amount you will pay for the motorcycle. In the main banks in the country, this rate varies considerably, in general, between 1.49% to 5.34%.
And it works like this: If you finance a motorcycle of R $ 10,000 with interest of 1.49% per month, you will have to pay monthly installments of R $ 360.92, considering a payment period of 36 months. With that, the final expense of the bike would be R $ 12,933.12.
But if you choose to finance a motorbike of R $ 10,000 with interest of 5.34% per month, to pay in 36 months, you will have to pay monthly installments of R $ 630.97, which would result in a total amount of R $ 22,714.92.
In other words, in the two examples mentioned, even though the value of the motorcycle and the payment term are the same, the difference in the amount you would pay in the end is R $ 9,781.80.
Another factor that you must consider is that each bank stipulates the amount to be financed.
As we have seen, although it is possible to finance the entire value of the bike, this is not common and creates greater demands.
The most common, therefore, is to find banks that finance between 30% and 80% of the bike’s value.
Term and installments
Also, keep an eye on the payment term, that is, for how long you will have to pay the motorcycle financing installments. In general, this period varies between 3 and 5 years.
It is also important to have an income compatible with the value of the installments. For this reason, banks, in general, do not provide financing whose installments exceed 30% of their budget.
Financing a motorcycle is one of the alternatives for those who want to buy a motorcycle, but do not have the full amount to pay in cash.
In financing, the bank buys your motorcycle and you pay in monthly installments, plus interest, for a certain period of time. For this reason, it is important to analyze the conditions for financing motorcycles well before closing the contract.
Take into account the interest rate charged by the bank, the amount and value of the installments, the payment term and give preference to having a good down payment, which will ultimately reduce the debt costs.