Many people all over the world enjoy riding motorcycles. However, owning and maintaining a motorcycle can be costly. A few basic steps can have a big impact and help cash-strapped cyclists find personal finance solutions for those who need to get a motorcycle loan with bad credit in order to keep their favourite ride.
Method 1 Increasing Your Chances of Getting the Loan
1. Consult with your dealer. Not all dealerships are as understanding of low or poor credit scores. You’ll need to find a dealer who will work with your credit to get you the loan you want. Some dealers specialise in this and have special relationships with lenders who are willing to work with you.
To find out if the dealer’s finance team or department can assist you, contact them directly.
Inform them of your situation in a clear and concise manner. If you don’t tell your dealer’s finance team your exact credit situation, you won’t get an accurate picture of how likely you are to be financed.
You may not need to submit a financing application to find out if you will be approved for the loan. When you apply for the loan, a competent finance manager should be able to tell you how likely you are to be approved.
2. Locate the best lender. It may be tempting to apply to as many places as possible in the hopes of having your application accepted. Applying to multiple lenders at once, on the other hand, can harm your credit score even more. You should also be aware that not all lenders are appropriate for a motorcycle loan.
Only apply to lenders who specialise in personal or motorcycle loans.
Look for terms like “bad credit,” “poor credit,” “no credit,” “motorcycle financing,” or “loans after bankruptcy.” However, keep in mind that if your bankruptcy has been discharged for two years or more, it is unlikely to be a factor.
Borrowers with poor credit may face higher interest rates. Before accepting a loan, make sure you understand all of the terms.
3. If you have a co-signer, notify your lender. A co-signer on a loan is someone who promises to make payments if you are unable to. If your co-signer has a higher credit score than you, this can help you get the loan you want.
Your co-credit signer’s should be excellent.
Having a co-signer ensures your lender that they will receive their payments.
4. Show your payments for a previous motorcycle. You can demonstrate your payment consistency if you have previously made payments on another motorcycle. Despite your low credit score, demonstrating that your previous motorcycle payments were always made on time increases the likelihood that you will be approved for the loan.
5. Increase your down payment. Try to save as much money as you can for a down payment without taking out a loan. By putting a larger down payment on your motorcycle up front, you demonstrate that you are serious about this investment. Larger down payments will be viewed favourably by lenders.
You will save money on interest when you take out a loan if you pay off the majority of the cost.
Method 2 Working With Your Lender
1. Comply with the fundamental requirements. You must first meet some basic requirements, regardless of how good or bad your current credit score is. The requirements assist the lender in determining your ability to repay the loan.
Valid forms of identification, such as a driver’s licence or motorcycle licence, as well as a social security number, are required.
You must be at least eighteen years old to apply.
You should have enough disposable income to cover the payments. You will have a better chance of getting the loan if you can show that you earn enough to cover the monthly payment.
Have had a stable job for at least six months. Having a consistent source of income indicates that your payments are more likely to be made on time and in the correct amount.
If you are self-employed, you may be required to demonstrate that you have worked in your industry for at least two years, as well as provide a profit and loss statement or a gross earnings statement for the previous year.
2. Make contact with your lender. It may appear that having a poor credit score leaves the majority of the application process to chance, but a little communication goes a long way. Discuss the following issues with your lender:
If you had a one-time reason for your poor credit, such as a medical emergency, explain this to your lender and assure them that this expense was unavoidable and has passed.
Demonstrate your level of income. It is not always necessary to show how much you earn; however, doing so will demonstrate that you are serious and capable of repaying your loan. Bring your last two years’ tax returns or six pay stubs to share.
Tell them how stable you are. Inform your lender if you have lived and worked in the same place for a few years. Stability indicates that you are more likely to repay the loan in full on time.
Explain any bankruptcy filings. If you did declare bankruptcy, you should explain why, especially if it was the result of a major life event, such as a medical bill.
3. Take steps to safeguard your lender’s interests. Showing that you are willing to work to protect your lender’s investment will help them consider your application. Demonstrate your willingness to collaborate by informing them of the following actions you should take:
Allow them to deduct payments from your account on a regular basis. This demonstrates your confidence in the funds’ availability while also assuring them that you will not miss a payment.
Inform them that you are going to buy full coverage insurance, an extended warranty, and a GAP policy.
In the event of an accident or theft, full coverage insurance and GAP policies will help protect the value of your motorcycle.
An extended warranty protects the value of the motorcycle by replacing and repairing parts covered by the warranty if they fail.
Method 3 Improving Your Credit
1. Check for mistakes. People who work to calculate your credit score are human and can make mistakes. Because of these errors, your score may appear much lower than it is. Examine your credit report and dispute any errors you find.
Experian, Trans Union, and Equifax are a few online services that allow you to dispute any errors you may have discovered. If you find a disagreement with one, go over all three to ensure that it is fully addressed.
Correcting errors in your credit score will raise it and provide you with an accurate picture of where your credit stands right now.
2. Try bargaining. Despite having missed or made a few late payments, you may be able to negotiate with your creditors to have these events changed in order to improve your credit score. When negotiating your delinquent or late payments, inquire about the following:
Ask your creditors if you can pay off a delinquent loan in full to have it labelled “paid as agreed” rather than a missed payment.
If you only have one or two missed payments on an otherwise excellent payment schedule, send a letter to your creditor emphasising your overall positive payments. They may remove the late payments, which will have a negative impact on your credit score.
3. Make good use of your credit cards. Credit card use is a great way to improve your credit score, as long as you use them correctly. Try the following steps to improve your credit score by managing your credit cards more effectively.
If you don’t already have a credit card, get one and start using it. If you do not qualify for a regular credit card, you may be able to obtain a prepaid credit card. These frequently charge higher interest rates as well as additional fees.
Keep the amount charged on your credit card as low as possible. Having charges that are at or near the maximum limit will harm your credit score.
Don’t overspend with your credit card. It is acceptable to spend 30% of your card’s maximum limit per month, so take the card limit and divide it by three to get the amount you can spend per month. Attempt to pay off the balance in full each month. Using your credit card excessively in a month, even if you pay it off, will give the impression that you are a careless spender.
Increase your upper limit. Increase the maximum limit if you use your card frequently. You must be cautious not to increase your spending as well. Aim for ten to thirty percent of your credit card limit per month.
No cards should be closed. Closing a credit card will reflect poorly on any credit scoring system. Instead, use your card to pay a small monthly bill that is easily repaid to keep it working for you.
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