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I can't answer that specifically, but I can tell you it will have to be higher than you would need for a "necessary" item like a car. The reason is that if money gets tight and you could only afford to make two payments and your house, car, and ATV are all due - guess what will probably slide?
Also, be careful of those special $69/mo. deals. Read the fine print carefully.
I know a lot of people will think I'm nuts here, but I hate the idea of financing a toy. At least consider trying to save up the cash to pay for it outright. It may take awhile, but it sure feels good when you get it.
i agree, only take out loans for something you NEED. You just end up paying too much for things if you add in all the interest you are acumulating. I only do loans for the house, and my student loans too but those are paid off. The rule of thumb is that a loan isn't a bad idea for a appreciating asset, and is not the best idea for a depreciating asset. In other words, get as big of a house as you can afford, and as small of a car payment as you can do.
well thats a good rule, but you have to establish credit before any lender even thinks about giving you 6 figures or more to buy a house. certainly a house is prob the biggest loan you will ever get. and the avg price of a car is about $29-30K so most people have to finance those as well. its best to do cash for toys if you can afford it but if you cant get a straight deal with reasonable and no variable finance rates and pay it off as quickly as possible. make sure they have no prepayment penaltys.
I financed my 450R b/c i wanted my cash somewhere else and it was like a straight 6% for the life of the loan, not 2.9 then 24% like most of these little 'deals' they have out now. If you plan on paying stuff off early, short tem financing isnt bad. just b/c you have a 3ry note @ 7-9% doesnt mean you have to go the full 3 yrs. i paid my banshee of in a yr. did i have to finance it, no, but i did it help est credit further. OF course the bank didnt make their projected finance charges but they are more than willing to do business with me again b/c they know i pay them back.
but if you are RICH and have enough cash to consistently outright buy EVERYTHING you need/want, then you dont need credit.
but its good to have both, in case you ever need it. one day you will.
always stay away from department store cards like sears. it's a waste and that 18-19% eats you up on little frequent purchases. if you dont have $$ for sears then save it up. their card isnt worht the hassle. i will never get one. i know so many people that sears has screwed over. i had a dept store card yrs ago that the sales person talked me into - i wasnt ready for that- but they get bonus money for every person they sign up but i found out quickly and with allot of hassle that dept star cards are dumb and sucker punches to the american public.
I took a loan from my bank, and they gave me good interest rates. If youve been with your bank for long enough, they are the easiest ones to get a loan from. They will take the title in collateral also.
2011 Arctic Cat 700LTD PS Viper Blue
All pretty good advice in general. Just wanted to add to that and give another "real life" story to the mix:
Credit scores are usually given as a number. Anything over 700 is considered good. 800+ is excellent (I think).
If you have no credit at all (a young person just starting their adult life) then you need to build it up. It can be hard to get started, but there are ways. A credit card is a good method if you get one and use it wisely. When I say wisely, I don't mean get a $5,000 card and max it out in the first week either. Use it very sparingly, always pay more than your minimum payment and in a year or two it can have a very positive effect on your credit score. Be sure to get a card that has a fixed interest rate. NEVER EVER get credit or a loan with variable rates, you will regret it.
If you are a teenager, get your parents to co-sign a loan for a car you might need to get to school/work. Pay every payment on-time and that will build your credit as well.
Unsecured loans (i.e. signature loans) or any loan that you try to get that does not include any collateral can be tough without prior credit history. However, if you can get one, even a small one, these do very well to increase your credit rating. It shows that a bank has trusted you to pay the loan without any sort of collateral for them.
There are various categories of loans, depending on what you are trying to buy with the money, and as such, various rules, and even laws (such as a home improvement loan, or home equity loan) that govern how much, interest rate, loan term and what you can use them for.
Things like quads, RV's, boats, trailers, etc are usually higher interest rate, shorter term and you need a fair amount of credit (and income) to qualify.
The loan institution places the rules on the loan based on their risk. In other words, they have to try and guess how risky lending that money to you is, and also on what you intend to use it for. A home loan is usually considered safe because even if you fail to pay and they forclose on the home, they can get their money back through the sale of the house. A quad however is a losing risk. The bike is not going to be worth used what it sold for new. It's a depreciating asset and thus they require higher credit rating, higher interest and short loan term. They are trying to ensure they're going to get their money (and make money doing it). Any luxury item you want aloan for is going to fall into this category.
Now, the real life part...I filed for bankruptcy 8 years ago. It wasn't due to any financial irresponsibilty on my part, it was just some very bad timing on my wife losing her job shortly after moving to a new location, buying a house, having our son and buying a car and a truck (both of them used, but new to us). I paid big money to lawyers to fight the dismissal, but lost (she worked for a union....I hate unions, but don't get me started), so for 3 years after she lost her job, I was trying to dig out of the hole and couldn't. Jobs in our new area don't pay a 3rd of what she was making prior to the move, so even though she did get a job, the cut in pay was too much (I was active duty military at the time).
Just 1 year after filing chapter 7 bankruptcy, I had credit, a credit card and even 2 bank loans. I kept my house, my truck and the wife's car through it all. It was tough, but we did it. Now, 8 years later, our credit rating is almost 800. I get signature loans, car loans, whatever I want. We have 2 credit cards with fixed rates (under 12%). I have it because I worked the credit system. Took small forms of credit as I coud initially, and kept building. Through all of it, I made my payments on time, never got frivolous with the credit cards and just worked my way through. I still will get turned down for some credit, such as a Best Buy card or the like because they were one of the companies that lost when I did the bankruptcy, but it's no big deal because I would never take one of their ridiculously high rate cards anyway.
So, if you have never had credit, then it wil be easy to get started (compared to what I went through). Just don't expect miracles overnight, it really does take time to build your credit. Check your ratings from time to time. It will cost you a fee, but it is worth it. There is often bogus info on you that was put in mistakenly (wrong person, or ID) and you need to know so you can clear it up (which really isn't too hard to do). Start small and keep at it. Make your payments on time! ONE late payment can set you back big time.
If you have a bad credit history, you can recover, it's a bit more difficult, but you can do it. DO NOT use one of those credit fixing services...most of them are scams (I know, I tried several right after the bankruptcy). They will charge you a fee (often several hundred dollars or more) and you won't get anything in return except a lot of talk about what they are attempting to do (which is just a bunch of nothing).
If you are about to get into trouble financially (can't make your payments due to job loss or something) DO NOT use one of those companies that claim they can get your payments reduced. Again, I speak from experience. They will also charge you several hundred dollars and won't do mcuh, if anything to help you. The best thing you can do is to go straight to your creditor and deal with them. Most banks or loan institutions will work with you to some degree. They aren't going to make it easy and most likely won't lower the payments to what you want, but it will make it a little easier. It's still going to ding your credit no matter what you do, so take what they are willing to work out.
Lastly, as mentioned, don't get loans for toys. That $6,000 quad is gonna cost you $8500 or more before it's over and chances are the bike will either be gone, or you might want to trade/sell it before the life of the loan is over. Chances are also that it if that is the case, it isn't going to be worth what you owe on the loan. To the contrary however, if you have a significant portion of the cost in cash (say you want a bike that costs $6500 and you have $4500 cash) then taking out a loan for the remainder might be doable and reasonable. Most banks are not going to finance 100% of a toy anyway, so if you do decide get a loan, you're still going to need a portion of the price in cash up front.