Motorcycle Loans: Financing a Motorcycle – Can You Afford The Payments?

Hello my name is Randy and welcome to this is a new episode idea we’re doing and it’s based on
people who have asked for specific loans to purchase different things this one is
about someone who wanted to buy a motorcycle and they wanted to borrow
$50,000 I’m not sure how much he had for a downpayment or how much he had saved
or how much his bike cost but wanted $50,000 to be borrowed so anyways we
have a nice little picture of a motorcycle Harley Davidson you can see
why someone would want to buy one there pretty good-looking right anyways so
let’s get on with the actual loan and what we do to figure this out to try to
give a good answer on how much of a loan you can afford the best thing we can do
is take a look at a DTI calculator also known as a debt to income ratio
calculator we have a link here write four for me here already and that takes
us to this calculator this is Ashley a calculator a shout-out goes to company
called good calculators calm and debt-to-income so let’s try their debt
to income ratio calculator and see if you can afford to borrow $50,000 you
scroll down a little bit here they have a lot of information about their loan
calculators and we have where we can enter some of the particulars in this
case this is Andrew he lives in Ohio if you’re wondering where we get this
information from it’s from a lot of loan websites we’ve had over the years since
2003 where people have written in or made comments asking requesting loans
and this is just an example that happened probably a long time ago but
it still works now so let’s move on so gross monthly income in this case we
went with some of it’s been prefilled out but anyways five thousand dollars is
the gross monthly income am i thinking I have a list of the basic items here
let’s see yeah here we go monthly income before tax was
five thousand and let’s see then we have partners before partners income before
taxes zero child support alimony zero extra income is twelve hundred so let’s
go back to the calculator and put zero for that and other income twelve hundred
dollars okay so that’s it pretty well for monthly income and now we can take a
look at mortgage and rent what have you in this case it was rent or eleven
eleven hundred dollars total and let’s take a look here property tax is zero
obviously it’s a rental condo and HOA fees zero home insurance zero so vehicle
loan $650 so let’s put that in our calculator car loan six hundred and
fifty dollars I believe there was zero for a personal loan let’s scroll down a
bit bit student loans no credit card minimum no actually no sorry credit card
minimum payment seventy-five dollars okay
it’s just entered 75 then alimony child support zero and other debt was zero so
now we can calculate this and you see the update of the numbers down below
coming in with a debt to in ratio of twenty nine point four four
percent so we explained here they’d explain actually on good calculators
calm a back-end debt-to-income ratio of twenty nine point four four percent your
credit risk level is modern back in front-end debt to income ratio is
seventeen point seven four percent credit risk level is considered low
total monthly income $6,200 total monthly debts 1825 and then we have a
nice little pie chart here with an income breakdown household debts other
debts and remaining so you know all information in this looks like a a
healthy debt to income ratio and some way somebody who could get a loan no
problem they should shouldn’t have an issue with this right but we have to
take into consideration credit score so let’s go back and take a look I think
I’ve got this information already entered here so we give the good example
the credit score was 640 so you know he wants to borrow $50,000 to buy this
motorcycle debt-to-income is twenty nine went for four percent we always want to
see someone’s debt to income ratio below thirty five percent that’s a really good
round safe number to go by and we have a little bit information about DTI here
and we have an expert Emilia Josephine Josephson she’s a financial writer she’s
been on AOL CBS News the simple dollar and she has a degree from the Columbia
and a degree from Oxford anyways she explains about what a healthy DTI is
over here if you click on this post explains all about what is a good debt
to income ratio recommended reading I would say you know explains everything
you need to know and what numbers to look for and like I said she comes to
conclusion of thirty six percent so we use 35% as a good safe place to be
but like I say back to credit rating so with a credit score of 640 it’s cut you
know it’s pretty risky because the the interest rate you would probably get for
a loan with a credit score it’s gonna be quite high so that’s really gonna affect
his debt to income ratio of course a lot of people would take the risk and do it with these numbers and a bank would
probably approve him but my recommendation would be unless you
really need that motorcycle you know if there’s something you want to get to
work with that’s something that’s completely different and maybe it’s a
necessity but if it’s just for pleasure and it’s
just for fun I would suggest holding off on that and waiting wait till the credit
score’s been approved quite a bit and get a better rate and maybe work on
saving up a lot of money beforehand so you have a nice down payment if he can
hold off that would be definitely my recommendation anyways I should point
out though I have to say this because the real experts in the room want me to
say this he looked down at the bottom of the post
this is transcribed it’s gonna be transcribed in fact checked by Lance he
has a degree University of Illinois so he will transcribe and fact check this
but I am NOT a specific expert I’d just want to run through and give you some
basic ideas so this goes Randy’s opinion to me in the video are completely his
own and not necessarily the opinions of the owners and our producers of WFL we
find lenders calm this commentary is not intended to be financial advice you
should seek professional advice from an expert in your area before making any
financial decisions okay so there you have it on the post you’ll have all this
information will be transcribed in will however are a white board here for years
a look at I hope this has been helpful it’s always
good to use a DTI calculator before considering any kind of a loan thank you
and farewell from

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