A guide to getting a motorcycle loan in Singapore, Lifestyle News
Much like buying a car, paying the full amount for a motorcycle may not be the best option. You can take out a bicycle loan instead. This guide will show you how to take out a motorcycle loan in Singapore.
Motorcycle loans, like auto loans, are meant to help you pay for your bike by borrowing money from a lender, usually a large amount of money. You will then have to repay the loan in fixed installments over the life of your loan.
The usual duration of motorcycle loans varies between 36 and 60 months depending on your agreement with the lender. You can also calculate the length of time you want to take out the loan by looking at a motorcycle loan calculator.
What is a motorcycle loan calculator?
A loan calculator allows you to check if you can afford a bike based on your current financial situation. You will be able to adjust the length of the loan, the amount of monthly payments, and some will even allow you to see the amount to be paid with added interest.
Note that the amount provided when using the Motorcycle Loan Calculator is an estimate as other factors may affect your loan amount. For example, your bank will consider your credit rating and eligibility before approving your loan.
What are the types of loans for motorcycles?
1. Classic motorcycle loan
Motorcycle loans are offered by specific banks, so you have to find them because it is quite difficult to find this type of credit. Why? Because banks or lenders are not inclined to approve auto loans for motorcycles.
This is due to the high risk of injury, or even death, that accompanies riding a motorcycle. In the event of the unexpected, lenders fear that the lender will default on their loans, which in turn will turn into bad debts.
2. Personal loan
If you are having trouble getting a motorcycle loan, what is your next option? Well that would be taking out a personal loan from a bank. Personal loans can be used for almost anything. The loan application process takes a few days and will require proper documentation.
Your bank will also perform a credit check to determine how reliable you are at repaying the money. As long as you have a decent credit score, it is very likely that you will get a low interest rate from a bank. Make sure to look around and see which bank is offering the best interest rate.
3. What other options do I have for getting a loan?
Internal financing of motorcycle dealers
If you were to buy a motorcycle from a dealership, they might offer you their internal financing options. Hoping to win you over, they’ll win you over with competitive interest rates, but internal financing is usually more expensive than a bank.
On the other hand, they have more incentives to offer. As a rule of thumb, compare the prices you get with other options before agreeing to anything, as you may never know if there may be other additional charges in the loan agreement.
This option is suitable for those who do not have a credit card or bank account to apply for a classic loan. Peer to peer (P2P) loans are basically sites that take individuals who need to borrow money from investors who lend unsecured loans.
Note that people regulate and manage this form of borrowing because it cuts down on formal financial institutions like banks. It is good to keep in mind that this is also a possible alternative for you.
What should you avoid when buying your motorcycle?
If you don’t have sufficient financial resources, avoid using your credit card to make the purchase. Even if you skip the loan process and the credit check, you will still have to pay your credit card bill.
Don’t miss it because credit cards have high interest rates and late payment penalties. Ignoring a credit card payment after you have exhausted your credit card for a vehicle will cause a downward spiral. The repercussions would eventually lead to a drop in your credit score.
Also, never make the mistake of using your home as collateral for the motorcycle loan. Risking your own home for a two-wheeler or any other vehicle is the worst business ever (if you have the reference). Consider anything else like future paychecks, stocks, other personal investments as collateral instead.
Finally, taking out a motorcycle loan is quite complex and involves careful planning and an understanding of your financial situation. Always buy within your means and if you cannot afford a motorcycle at the moment, even if it suits you or if you dream of owning one. Save and wait a little longer.
Better to do this than end up with late payments on a motorcycle loan if you do take one. We hope this guide will help you make an informed decision and give you a better overview of motorcycle loans and financing options.
This article first appeared in Motorist.