How to Get Approved for a Motorcycle Loan despite Bad Credit

A motorcycle loan will not come easy if you have bad credit. There are a number of reasons for the challenge of obtaining financing in this situation, and there are also maneuvers you can use to overcome those reasons.

Problem: You already have a car loan

Solution: Use the equity you have built up in your automobile as collateral for a motorcycle loan or personal loan.

Some lenders will be hesitant to lend to a bad credit borrower with other debt obligations. Since motorcycles are typically a secondary form of transportation, it is likely a motorcycle loan borrower already has a car loan. Where there is a car loan, there is often car equity. Put the equity to work by placing it as additional collateral on the motorcycle financing. You may have to alter your car insurance to do so.

Problem: You want the best bike on the market.

Solution: Settle for less than the best.

Bad credit borrowers looking for car loans need to be realistic with what they can afford and what is the best option for their financial freedom instead of just their riding enjoyment. In order to make sure you can afford your loan, shop for the loan first. See if you can locate a loan that will match your budget, and then find a motorcycle that fits within that loan limit. When you approach the situation this way, you will be more likely to say "no" to purchasing a bike you cannot truly afford.

Problem: Interest rates are extremely high.

Solution: Save up for higher monthly payments and a shorter loan.

In most situations, borrowers who are able to provide large payments and opt for a short loan cycle will find lower interest rates. Though the loan may cost them more month-to-month, they will recognize tremendous savings in the long run. This is a particularly good option for borrowers who have high salaries but bad credit due to mistakes they have made with other loans. They can elect to pay a lot each month and pay the loan off in as little as a year.

Problem: The bank turned you down.

Solution: Consider alternative lenders.

Since motorcycle loans tend to be smaller than other vehicle loans, they are easily sourced through a number of alternative lenders. In fact, many motorcycle manufacturers offer a revolving credit line large enough to cover the entire cost of the purchase. Be aware: the rates on these revolving lines can adjust to very high interest. However, if you can pay the loan off withing the initial period, which may even extend for 12 months, you will typically avoid the rate adjustment.

Problem: You cannot afford insurance and payments.

Solution: Do not purchase a motorcycle.

At the end of the day, there is much more to owning a motorcycle than simply getting the loan. If you cannot afford the maintenance that goes along with the bike, including potentially higher insurance payments on your existing auto insurance, you should not take a loan even if it looks like a good deal. Be smart and wait until you have more cash flow to take the loan out.

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