I've Declared Bankruptcy - Is a Motorcycle Loan Possible?

Even after you declare bankruptcy, motorcycle loans may be possible if you are willing to pay higher interest rates. Your interest rates will always be higher after declaring bankruptcy because you will be a risky-borrower for most lenders. To secure the loan, however, you must prove you are still credit worthy even if you are high risk. This means you should present your application in the best light possible according to best-practices in loan applications for those with bad credit.

Ensure Bankruptcy Is At Least Five Years Old

If your bankruptcy is fresh, you should not expect to get this type of large-purchase loan. Bankruptcies must be removed from your credit report after a certain amount of time set by the state you live in; this is called the statute of limitations. The statute of limitations for bankruptcies is longer than that for delinquent payments across the board, but it varies significantly from state to state. In any case, even if the bankruptcy is not off of your record, you should ensure it is more than five years old. Any delinquent payments should be more than two years old before applying for this type of loan.

Provide a Down Payment

A sizable down payment is the fastest way to show a motorcycle lender you are able to meet the financial obligations of owning a bike. Since motorcycles are less expensive than cars, it is possible to make a 50% down payment without breaking the bank. This will also decrease the amount you must finance, making the loan less expensive due to interest rates over time. Providing this sizable down payment means you must be very wary of your budget when motorcycle shopping. Financing a large portion of your new purchase puts you at risk for another bankruptcy if you are shopping outside of your true budget.

Show Financial Hardship

You should provide a statement to supplement your application showing the financial hardship that lead to your bankruptcy. For example, if you went through a divorce that ended in bankruptcy, this would be a financial hardship. You should then show that this situation has expired and you are in good standing financially at this point. Providing this statement can expedite your application. This gives a lender the chance to make a tremendous profit off of you because they will have every reason to believe you will pay off the loan but retain the right to charge you a higher interest rate.

Provide Proof of Income

One part of showing you are credit worthy is showing you have the funds available to make payments. Proof of income can come in the form of a current payment stub or through access to a bank account. Allowing the lender to see funds in your account will show them you have money available even if you have another financial hardship. You should show you have had consistent employment for at least two years, preferably with a consistently increasing income. With bank accounts, you should show more than one account that has been in existence for over two years.

 

 


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