What to do when you need to Refinance your Motorcycle Loan
When taking a bike loan, it may happen that there will be a need to restructure it, since the current terms and obligations do not suit your present budget situation. This may happen for a number of reasons, the most important of which are the high interest you are paying on your loan and the amount of money you currently have at your disposal.
When these things happen, it might be wise to see whether you are able to refinance and restructure your current motorcycle deal.
The most common advantages of refinancing your loan are:
- Lowering the interest rates, which may help you save a lot of money on interest charges and give you the option of paying less every month through monthly installments
- If you are in a tight spot with your budget, the refinancing option will allow you to free up your monthly budget, since a longer loan term may drastically lower your payments
- Reducing the interest rate through reducing the term of the loan, thus saving money on the interest charges
The issue is that your financial institution where you had taken the loan will not offer to restructure it directly, and you have to go through some pains to obtain a good refinancing deal for your motorcycle loan.
The first thing that you need to do, when going out to take a refinancing loan is to contact your financing provider, and get informed on what is the current loan status, and how much you have left to pay. Other things that you need to gather are your social security number, the information about the motorcycle that you took the loan for, insurance details and a copy of the current contract. Once you have all this information, you can go out to search for a good loan refinancing deal.
Getting a good loan restructuring deal depends on the status of your current loan, as not all options are applicable to all situations.
There are three recommended possibilities for refinancing your loan:
- Simple interest installment personal loans
- Refinancing via a credit card (usually Visa or MasterCard)
- A home equity loan
Simple interest installment personal loans
If your situation is such that you have to pay off a big amount of money and you currently have a high loan balance, the best option that you can try to find is a simple interest installment personal loan. These are offered by many financial institutions, like banks and credit unions, or an online lender. Basically, these financial institutions will provide you with a check which you will use to pay off the entirety of your current loan, and then set up an agreement with fixed interest rates, over the period of time agreed.
The period of time for repayment can be up to 7 years (84 months), and the interest rates vary according to the term of the loan. The financial institutions that provide these loans offer competitive interest rates, so it is advisable to go loan shopping a bit in order to find the refinancing deal that will suit your needs in the best possible way.
Refinancing via a credit card
The second option available, and this option is better for you if your situation is such that you don’t have as much left to pay off on your current loan, is the option of refinancing via a Visa or MasterCard credit cards. These credit card refinancing options offer to give you the advance necessary to pay off your current loan, and offer you repaying terms of 12 to 24 months. The best thing about this option is that the annual interest rate applied is 0%.
This can save you great amounts of money that you currently pay on your interest. The problem is that you have to be very well organized with your credit card payments, because, otherwise, you can end up being in a lot of trouble.
A Home Equity Loan
The third recommended option for refinancing your bike loan is a home equity loan. This is applicable only if you are a home owner, and your home is currently not under mortgage. This option contains two possibilities, and those are home equity line of credit and a fixed interest rate loan. HELOC (Home Equity Line Of Credit) is different from the fixed interest rate loan in one thing, and that is that the interest rates, and thus your monthly payments, will fluctuate and are subject to change.
One of the benefits of these kinds of refinancing deals is that the interest can be tax deductible, thus lowering your payments significantly. The downside is that you can lose your home, if you start defaulting.
All in all, motorcycle refinancing deals are a good option, if you are currently in a tight financial spot. The personal loans are basically the best option, but creative attitude towards these things are always advisable in search of the best possible deal.
Ivan Dimitrijevic has posted various articles that are connected to a wide range of topics that include online business and motorcycle financing options, etc. for companies like Aussie Loans, for example.