Buying a scooter is very exciting! I definitely get it. That said, if you decide that you want to finance a scooter, go into this experience with some knowledge under your belt to keep it a fun experience. Some offers can be really enticing, but the fine print can be hard to weed through. Make sure you read and understand the terms completely and look around to consider all of your options before you head anywhere to actually make a purchase. This will save you time and money (and maybe your sanity)!
Financing anything boils down to a lender taking a full look at your profile and ability to repay. There are 2 primary components that they look at, and it boils down to having the best credit repayment history and adequate money to juggle all of the commitments you’ve taken on.
A significant part of what a bank will consider involves a credit check. They are looking at the number of accounts, the available credit compared to the limits on revolving accounts, the amount remaining on any installment loans compared to their original value, delinquencies, the age of your accounts, the number of new accounts, and every line item on your report. Literally. There are 3 credit bureaus in the United States, and they may check one or all of them.
Essentially, they boil down your credit history to a score as a way to assess how you have paid your obligations in the past. Your repayment in the past is a significant indicator of your likelihood to pay if they extend credit to you.
Your Employment Profile
They will also ask for information related to your employment. The biggest factors here are how long you have been with your employer and how much you make. Long term employment appears that you are stable, but even if you switch employers more often, staying in the same industry is generally ok.
Your pay is important as they layer it against expenses (mostly from your credit report) to make sure you are able to repay the debt with your current income.
Read, Ask, and Understand EVERYTHING
This applies to all financing and not just scooters. There are layers to the transaction, and at each stage, it is your responsibility to understand everything that you sign your name to. These are legally binding documents, and, “I didn’t understand,” will not get you out of them. It can feel uncomfortable to speak up, but it is in your best interest to ask and clarify along the way. Here’s a list of the different stages that you are essentially agreeing to something.
- The price of the scooter
- The add-ons (more on that below)
- The financing
Estimate Your Payments
It can be helpful to see what a payment might look like before you go down this path. Here is a link to Google for an auto loan calculator that won’t require you to go to another website. Just plug in your estimates on the loan amount, interest rate, and the term you hope to have. It will display the total cost of that loan that includes interest and a monthly payment value for you to gauge the impact on your monthly budget.
If you are not quite sure what to throw in for a realistic cost, check out this link for the guide I put together for the cost of a scooter. Just remember that the cost lits are without any accessories or the tax/title/license that will apply to your state. I have sales tax in my area while you may not, so be sure to add some buffer when you are exploring your likely payment to avoid surprises when you sit down to sign on the dotted line.
You can charge a scooter on a credit card, and this may be an even more attractive option for a lower value scooter if you have a card already with the right amount of available credit and if your interest rate is really low.
Pros: If you have a card to put it on already, you don’t have to take a hit to your credit report by having an inquiry from a lender and a new account on your credit report that will reduce the average age of your credit history.
Cons: This is a bad option if you have a high interest rate, and you will pay significantly more for the scooter over the long run. The average credit card interest rate at the moment is 16%, so I’d be looking for a 0% balance transfer offer or skip this option unless I had no choice.
Your Bank May Have Options
The bank you normally conduct business with might be an option to look into BEFORE you even look at a dealer. Scooters are a type of motorcycle, so look for motorcycle financing specifically to start this conversation. If they do not offer specific motorcycle/ATV/motorsports financing, then they may have a personal loan option that could work for you. Below is a snapshot of what is available through my local credit union.
|Loan Type||Rate Range||Term|
|New/Used Motorcycle||3.50% – 17.99%||Up to 72 months|
|Secured Loan (build credit option)||2.40% – 5.00%||Up to 60 months|
|Personal Loan||7.25% – 17.99%||Up to 60 months|
Dealer Financing Options
Sheffield Financial and Synchrony Bank are the big players that offer financing for Kymco, Genuine Scooter Company, and Vespa. Roadrunner Financial provides financing for Lance Powersports. Honda, Suzuki, and Yamaha have their own finance arms that can provide financing, and their dealer partners also have access to GE and Sheffield Financial, as well. Plenty of options abound.
Rates tend to range for 2% – 13% depending on your specific credit and employment profile. You can even get around 1% if a manufacturer/dealer is looking to clear out older models, but regardless, make sure to read the fine print.
How long you will make the payments is another element to consider. Most loan lengths are 36 months or 60 months. Generally, the fewer payments you opt for means you’ll have higher payment amounts but a lower interest rate. Essentially, you are reducing your risk of not repaying the debt by going for a shorter term, and banks like to get their money back.
Dealers may also offer you a credit card usually as part of the Synchrony Bank financing. These offers may have a 0% 6-month deferred interest option, so you can pay it off quickly and pay nothing additional. That’s the best of a financing situation!
You may be offered additional items such as extended service plans or loan repayment insurance, so think through what you are comfortable adding to the bottom line.
- You decide what you want for scooter servicing if it is offered, but essentially they are offering to extend the warranty or provide maintenance on your scooter. I gather this isn’t as commonly offered as it is for cars.
- The loan repayment protection is essentially insurance that protects the payment on the loan if you were to lose your job. The insurance company would take over those payments during your employment gap, and then you pick the loan repayment back up when you go back to work.
Even if you decide to entertain either of these offerings, be sure to read the fine print and ask questions. They can get complicated, and if you feel like these products are the right thing for you, it is important that you don’t have any assumptions that aren’t spelled out to be sure they are what you expect.
Poor Credit at the Dealership
Dealers still have options for you, but the terms are not likely to be as ideal. Your interest rate will be higher, they may limit the amount you can purchase, ask for more downpayment, and they may have a shorter repayment term in as little as 12 months.
If Credit Doesn’t Work Out for You
If you are unable or unwilling to go the financing route, don’t give up! Here are a few options just to help you think outside the box.
- Do you have anyone willing to cosign with you? I hesitate to throw this out there, but if you are in desperate need of an affordable transportation option with someone willing to help AND you will work your tail off to get it paid off to get that burden off them, then ok.
- Can you give it some more time to increase your downpayment amount? Maybe you need some time to sell some items around your house or more like months to save through your monthly budget?
- Just save the whole amount. If you’re just hoping to have some fun on a scooter faster, then just saving upfront will be the most financially beneficial route compared to paying a lender for the luxury of getting the scooter now. I get it, though! They are so incredibly fun!
Wrap It Up
Regardless of how you get your scooter, I do hope that you can get into the joy of riding ASAP and spread some of that scooter love! As always, wear your safety gear!