Low-interest loan for a small amount of money?

[PolyOlefin]

I am a young man who will have saved $3600 by June 2009 for purchasing a used motorcycle. I am looking to take out a $1000 loan at that time to supplement the savings.

Where can I seek out a loan with the lowest interest rate possible? Not looking for a term longer than 36 months. I doubt my bank would give me a good rate since my credit history is less than one year old (but flawless), and my credit card charges 14.99% interest. I'm also skeptical about getting a reasonable rate from a social lending site, due to my credit history.

Thanks for any advice!

[Seeker]

Originally Posted by PolyOlefin

I am a young man who will have saved $3600 by June 2009 for purchasing a used motorcycle. I am looking to take out a $1000 loan at that time to supplement the savings.

Where can I seek out a loan with the lowest interest rate possible? Not looking for a term longer than 36 months. I doubt my bank would give me a good rate since my credit history is less than one year old (but flawless), and my credit card charges 14.99% interest. I'm also skeptical about getting a reasonable rate from a social lending site, due to my credit history.

Thanks for any advice!

Two alternatives....

1) Co-Signer (someone with good credit co-signes for you).

2) Secured loan. Since you will be buying the motorcycle with 3.6K, it's very possible that they'd be willing to loan you the rest based on using that motorcycle as a form of securing payment. If you miss a payment, they re-possess the bike. 75% down is a commitment... 1k is not a lot of money if you have some form of income.

[MiikeB]

The idea of taking out a loan to supplement savings seems to contradict itself. If you must buy the motorcycle in June, instead of waiting until you have more saved up, then simply deal with not having a savings until you can rebuild it. If something comes up, then worry about getting a loan.

[jIM_Ohio]

don't assume you cannot get a better loan until you try. 14.99% is easy to beat.

You might be better saving for the additional $1000. That is another 8 months, so set aside another $120 each month the loan issue a moot point.

[PolyOlefin]

Thanks for the replies. Ideally I would wait until I have hard cash to purchase the motorcycle in full, but that would require me to wait two years to buy one. Frankly, I don't have that kind of will power.

Originally Posted by MiikeB

The idea of taking out a loan to supplement savings seems to contradict itself. If you must buy the motorcycle in June, instead of waiting until you have more saved up, then simply deal with not having a savings until you can rebuild it. If something comes up, then worry about getting a loan.

I can see my wording wasn't quite clear, I only meant that I was planning to borrow $1000 so I would have $4600 with which to shop.

[kork13]

Originally Posted by MiikeB

The idea of taking out a loan to supplement savings seems to contradict itself. If you must buy the motorcycle in June, instead of waiting until you have more saved up, then simply deal with not having a savings until you can rebuild it. If something comes up, then worry about getting a loan.

This is no different than buying and financing a car--he simply stated it differently. He's got a $3600 down-payment, and wants to finance the last $1k.

OP, I say talk to your bank about it. As I said, it's approximately equivalent to a car loan, except that it's a lower value and you have a much higher "down-payment" than normal (75%). I'm almost certain they would give you a competitive rate (easily below 10%). A little while ago, I financed $11k (of $21k) for my car at 8.7%. Like you, I had almost non-existent credit, having nothing but a credit card for the previous 2 years. I'd say it's worth a shot. If you really want to get the bike now, you'll get a minor additional bonus by getting a small loan: it will improve your credit history, so long as you make regular payments in full for it.

Originally Posted by jIM_Ohio

don't assume you cannot get a better loan until you try. 14.99% is easy to beat.

You might be better saving for the additional $1000. That is another 8 months, so set aside another $120 each month the loan issue a moot point.

Jim, one thing to note... he's wanting to get $1000 for a term of no more than 36 months.... Seems to suggest a tighter budget that doesn't allow for that significant of an increase in savings.

[maat55]

Originally Posted by PolyOlefin

Thanks for the replies. Ideally I would wait until I have hard cash to purchase the motorcycle in full, but that would require me to wait two years to buy one. Frankly, I don't have that kind of will power.



I can see my wording wasn't quite clear, I only meant that I was planning to borrow $1000 so I would have $4600 with which to shop.

You give up to easy. I'll bet if your life depended on it you could pay cash for the cycle by june of 09. It may involve working extra hours, maybe mowing lawns, raking leaves etc., but easily done. Heck, you could get it before then, with cash, if you want it bad enough.

[jIM_Ohio]

I could think of around 5 ways to make $1000 extra in one month EASY.

I can clear $200 in one day reffing about 5-8 soccer games- cash no taxes
I can make $5k doing tax returns from february-april
I could mow lawns and do odd jobs
I could cut expenses
I could get a roommate

[disneysteve]

Originally Posted by jIM_Ohio

I could think of around 5 ways to make $1000 extra in one month EASY.

I can clear $200 in one day reffing about 5-8 soccer games- cash no taxes
I can make $5k doing tax returns from february-april
I could mow lawns and do odd jobs
I could cut expenses
I could get a roommate

I agree. You want to have an extra $1,000 nine months from now. That means an extra $111/month. Sell on ebay. Mow lawns (even if you have to buy a mower you'll come out ahead). Walk dogs. Babysit. Tons of ways to pick up a little extra cash. And, of course, you could spend less than $4,600. Not sure where you came up with that specific number. In any case, I'd say to buy that bike when you have cash in hand.

[PolyOlefin]

All great tips on making extra cash, but I've already accounted for them. I'm a full-time student working a part-time job, so I don't have time to do odd jobs. The money from items I plan to sell on eBay, I've realized, will only offset the cost of Christmas and birthday gifts I will need to buy in the near future.

However, I have been going nuts cutting expenses! I now brew coffee and carry a thermos, hypermile while driving, raised my insurance deductibles, etc. All things considered, I can only realistically budget $3600 in savings by June.

I even plan on selling the Christmas gifts I receive in order to fund this bike. Is that immoral?

[kork13]

Originally Posted by PolyOlefin

I even plan on selling the Christmas gifts I receive in order to fund this bike. Is that immoral?

Bad way to go IMO, you'll never get the money your friends/family paid for it, and if they find out, they could easily be offended... If that's your plan, simply tell people (especially if they primarily come from family) that you're aiming to get a bike, and would prefer money for the bike to physical gifts. Or, ask for some of the bike-related stuff that you'll have to get anyway, such as helmet, gloves, riding vest/jacket, etc. It sounds cheesy, but honestly, I never know what to get people anyway, and always appreciate ideas. I always prefer to give gifts I know the person will enjoy and appreciate. I expect that others would feel the same way.

[disneysteve]

Originally Posted by PolyOlefin

hypermile while driving

Many hypermiling techniques are illegal and/or extremely dangerous. Please don't risk life and limb (or tickets that will cost more than you are saving) just to save a few cents on gas. It isn't worth it.

[PolyOlefin]

Actually, over the past six months or so, I've become somewhat of a pseudo-guru on hypermiling.

Saying hypermiling is dangerous is like saying credit cards are dangerous. It all depends on the individual user's habits. Plenty of hypermiling techniques are perfectly safe and other motorists on the road wouldn't even realize you were hypermiling. Cleanmpg.com is a great resource to learn the facts.

[disneysteve]

Originally Posted by PolyOlefin

Saying hypermiling is dangerous is like saying credit cards are dangerous. It all depends on the individual user's habits. Plenty of hypermiling techniques are perfectly safe and other motorists on the road wouldn't even realize you were hypermiling.

Agreed. There are safe, legal techniques and then there are the other kind.