Is Getting a Motorcycle Title Loan a Feasible Option?

You may seek a motorcycle title loan if you are willing to put down your bike as collateral and pay high interest rates. While title loans are a form of secured loans, meaning they are made with collateral, they are still expensive to the borrower if you are putting down a motorcycle. Typically, secured loans are cheaper than unsecured loans, but this may be an exception because of a few factors:

Resale Value of the Motorcycle

It is difficult for lenders to determine the actual value of your bike on the resale market. This means, if they do have to repossess the bike, they cannot accurately assess what they may be able to receive as a payment in return. Homes have more stable and accurate assessed values than luxury items like motorcycles.

High Risk Loan

Those who are seeking motorcycle title loans are often high risk borrowers. They own a luxury vehicle, a motorcycle, but do not have the $5,000 to $10,000 typically available in the title loan. This means they have very little savings in comparison to their debt load. The ratio of your debt to assets affects your credit, driving up your interest rate.

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