Get a loan to buy an ATV, UTV, snowmobile or personal watercraft
Finding the right vehicle for your outdoor sports is essential, and so is finding the right loan. If you’re buying an all-terrain vehicle (ATV), snowmobile or other powersport vehicle, you may find it hard to get a loan, because of how lenders perceive the risk associated with these purchases.
Powersport loans come with higher interest rates and more stringent credit requirements. Why? Lenders consider powersport vehicles luxuries, and there is a greater risk of default. So, for example, you’re making payments on a truck you use to get to work every day, and an ATV that you take out a couple of weekends a month. If you fall on hard financial times, you’re more likely to skip a payment or default on the ATV loan.
Typically, powersport loan terms range from 24 to 72 months, although some lenders may offer loans up to 84 months. As the length of the loan increases, however, borrowers should expect to pay more over the length of the loan in interest.
10% to 20%
The term “powersports” encompasses a wide array of different vehicles, including:
The rates on a powersport vehicle can vary widely, depending on a number of factors. With solid credit and a good down payment, you may be able to get financing for as low as 5 percent interest. The following factors affect your interest rate.
Credit unions may offer the best rates on powersport loans. On the other hand, larger, national banks may offer specialty loan products geared specifically toward powersport purchases. Compare lenders to find one that can offer the best rates on your powersport loan.
The borrower’s credit has a significant impact on the overall cost of the loan. Borrowers with lower credit scores and more existing debt face higher interest rates and less favorable loan terms because they represent a greater risk to the lender.
Generally speaking, the longer the loan, the higher the interest rate; the shorter the loan, the lower the interest rate. Lenders find shorter loans less risky, which means a lower interest rate for the borrower.
The amount of money the borrower puts down on a loan can have a large impact on the interest rate, as well as the length of the loan term. If you want a lower interest rate or a longer loan term, offer a larger down payment.
Loans for used ATVs or other powersport vehicles may be more costly than loans for new vehicles in the form of higher interest rates or larger down payments. This is because used powersport vehicles represent a larger risk to the lender, since their value has depreciated.
Keep the following points in mind when purchasing a used ATV.
When it comes time to purchase the perfect ATV, Jet Ski or other powersport vehicle, it pays to be aware of the different kinds of financing available to you. Before you shop, do a little research to learn about the costs of borrowing, considering interest rates, terms and fees, and which is best for your situation.
A credit card is perhaps the easiest way to finance a powersport vehicle purchase — but it is often the most expensive. Credit cards tend to have higher interest rates than other means of financing, particularly if your credit is less than stellar.
You may be able to obtain financing directly from the dealer. Dealer financing may include promotions, such as financing that offers zero percent interest for a certain period of time. Be sure to ask about the rates once that promotional date ends, as it’s often fairly high. Dealers may also offer third-party financing.
Banks and credit unions may offer financing for powersport vehicles — in fact, some have loan products specifically designed for powersport purchases. Others may allow for powersport purchases with other loan products, such as recreational vehicle loans.
If you need a powersport vehicle for a commercial purpose — such as a UTV used by farm employees or clubhouse golf cart rentals — a commercial vehicle loan may be beneficial.
The benefit of taking out an unsecured personal loan to purchase a powersport vehicle is that you are not offering the vehicle as collateral, so if you fail to repay the loan, the bank can’t repossess the vehicle. On the other hand, offering collateral helps get you a lower interest rate, so taking out an unsecured loan could cost you money in interest over the life of the loan.