Finance a Motorcycle With Bad Credit
You want to buy a motorcycle, but you've had some problems in the past and your credit report is not good. You may have late payments or even a bankruptcy or reposession, and your bad credit is getting in the way of financing a motorcycle. It's not easy to make credit purchases when you have bad credit, but there are a few steps you can take to boost your chances of approval. If you are willing to take them, you may be able to finance a motorcyle despite your bad credit.
Instructions
1. Make sure your credit is in the best shape possible. Even if your credit is bad, you should still make sure there are no erroneous negative items. Get a copy of your credit reports from the three major bureaus (Equifax, Transunion and Experian). You are entitled to a free copy from each bureau every year. If there are any incorrect negative items, file a dispute. If they cannot be verified, the credit bureaus must remove them.
2. Before applying for a motorcycle loan, save up a large down payment. This will save you money in the long run because your loan will be smaller, meaning that you will pay less interest. This is especially important for motorcycle buyers will bad credit because they typically have a very high interest rate. A large down payment will also help you to get a loan more easily, since lenders prefer to loan smaller amounts to borrowers with bad credit.
3. Try to find a loan before you go to the motorcycle dealer. When you have bad credit, you're almost guaranteed to pay a higher interest rate because lenders are taking a bigger risk on you. Dealers tend to take advantage of this. You're better off talking to your own bank or credit union. Even though you have bad credit, if you have been dealing with a financial institution for a long time, they may still be willing to give you a motorcycle loan. You can also search for loans online.
4. If you cannot get a motorcycle loan on your own, go to a dealer who has experience working with buyers with bad credit. Be alert because some dealers will steer you towards high interest loans and pocket part of the extra cost as additional profit. Even though you can expect to pay a higher interest rate because lenders see you as a higher risk due to your bad credit, it should still be within reason.
5. If you cannot get a motorcycle loan on your own, try to get someone with good credit to act as a co-signer. This should be a last resort, as your co-signer will basically be agreeing to be fully responsible for the loan if you default. This can cause bad will if you are unable to pay the loan and your co-signer ends up paying and having his own credit ruined. Weigh the benefits and risks before you ask someone else to take on this responsibility.
Tips Warnings
Be realistic about the type of motorcycle you can afford when you have bad credit. You might want a top-of-the-line model, but it's much more difficult to get a loan for a higher amount. You may have to choose a less-expensive motorcycle in order to be able to qualify for financing.
Some motorcycle dealers will try to take advantage of buyers with bad credit by pressuring them to buy loan insurance and expensive options. Don't give in to this pressure and buy unnecessary add-ons that will boost your loan amount even higher.
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