If you are planning on buying a motorcycle, you may need to finance it. You can either go through your own bank or credit union or finance it through a dealership. Here are some pros and cons of financing it through a dealership to help you decide if this is a good option for you.
Pro: You Have More Flexibility With the Types of Motorcycles
When you get financing through a dealership, there are typically fewer limitations with the type of motorcycle you can choose. If you were to go through your bank, they might limit you to spending a certain amount on the motorcycle. However, there tend to be more flexible terms with the type of bike you choose and how much it costs when you go directly through the dealership.
Con: There may be higher interest rates
Unfortunately, it is not uncommon to pay higher interest rates when you choose financing through the dealership. One of the few benefits to going through your own financial institution for a motorcycle loan is that you might get a lower interest rate, especially if it is your own credit union. The credit union knows you and your financial history, so they might be willing to give you a good deal if you have good credit. However, dealerships often have higher interest rates in order to accommodate most people applying for financing. This is something to keep in mind.
Pro: It is easier to get approved
A major benefit of financing through the dealership is that it is easier to get approved than with a bank loan. This is because the dealership isn't just providing you with a loan, they are trying to sell a motorcycle or vehicle. Since they want the sale, they are more likely to approve a loan, even if you don't have the best credit history or your credit score is in the low range. If you don't have good credit, they will approve you in many cases, though they might increase the interest rate, require higher monthly payments, or require a substantial down payment for the motorcycle.
Con: You have no control over the lender
When you go with dealer financing, that dealer makes an agreement with one of the lenders they work with to give you a loan for your motorcycle. While this can make it easier because you don't need to choose from different financial institutions, you also have no control over it. You may not like dealing with the particular lender they finance through, but you won't have a choice in the matter. When you go with direct lending, you have more flexibility over who you get financing from, giving you the option of choosing your own bank or researching other lenders for the new motorcycle.
For more tips on buying a motorcycle, contact a dealership like Canyon Honda.