Don't Let The Depreciation On Your Motorcycle Affect Your Motorcycle Loan
Written by: Jay Fran
The depreciation on new motorcycles can be very quick as soon as
you dive it away from the showroom. As a result, as a motorcycle
buyer entering a loan agreement you should look for a motorcycle
that is in high demand and will have less depreciation than
other less popular models. The reason is that if your new
motorcycle depreciates faster than you are paying down the
principal on your motorcycle loan than you can actually be
caught upside down. Upside down means you owe more on your
motorcycle than it is worth if you were to sell or trade it in.
An upside down situation is much more likely to happen if you
loans that extend for 60 to 84 months with zero down
payments. This is especially true in the first 24 months of your
motorcycle loan, because it is likely that your motorcycle is
depreciating faster than you are paying down the principal on
your loan. Here is some advice to help you avoid being caught
upside down in your motorcycle loan.
Make Extra Payments: Always try to make extra payments on your
loan. If you make an extra payment put the money towards the
principal of your loan.
Put Money Down: Always try to put a down payment with your loan.
Try to avoid zero down payment loans.
Avoid Rule Of 78: Look for motorcycle loans that use simple
interest and avoid loans based on the Rule Of 78 interest
calculation. Rule of 78 forces you to pay more interest in the
early years of your loan so you pay down less principal. If you
need to sell or trade in your motorcycle it is likely you will
be upside down in a Rule Of 78 loan for the first 24 month of
the loan. Ask your lender what interest calculation they use. If
they say Rule Of 78, avoid them. If they say simple interest
this is the best option.
Do Not Use Credit Card: Do not purchase your motorcycle on your
credit card unless you have the money to totally pay it off at
the end of the month.
Copyright (c) 2005, by Jay Fran This article may be freely
distributed as long as the copyright, author's information and
the below active live link is published with the article.
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