Planning to get a new motorcycle on finance, determining best financing option, especially when you have bad credit score can be arduous. Similar to automobile financing, most motorcycle dealers also provide financing options when you decide to get a bike on finance. These days getting motorcycle loans are very easy and they are available for any kind of people that means people with different kinds of credit scores.
Motorcycle Financing Options
There are many lending sources where you can receive them from banks or other private lenders at reasonable interest rate. People with good credit score will have much better options than people with bad credit score. The following are a few motorcycle financing options.
- Financing programs from the manufacturer: If you have a very good credit score then manufacturer financing program can be the best option. These programs offer lower interest rate; these programs exist with all major brands.
- Motorcycle dealership: Getting finances through this option is convenient but it could cost significantly on the long term this is because this financing option usually comes with high interest rate. People with good credit score can easily get approved for this program and it is rarely available for bad credit score candidates.
- Home equity loans: This loan can be good option which provides required funds to get a bike. In this loan borrower secures loan using the equity value of their home. As this loan uses the home as collateral, they usually have low interest rates.
- Payday loans: Payday loans come under unsecured loans; these should be the last option as it holds high interest rates since it do need any credit check and collateral. This loan is very helpful for the people with bad credit score and do not have any other option to purchase a motorcycle.
- Independent lenders: These types of lenders are not related to any banks or financial firms, if you do not qualify for a dealership or a manufacturer program, considering this financing method can be a good option. The chance of negotiating for lower interest rate will be more as you know lender personally.
How does a motorcycle loan work?
There are many lenders who offer motorcycle loan to purchase a bike, several banks and credit unions are one of the best places to find them. But before choosing them you must be careful in verifying interest rate and payment term since different lenders will have different interest rates. These lenders also consider credit score to determine the interest rate, so while you shop around for best deal carry credit file along with. To acquire the best deal on motorcycle loan, get quotes from various lenders, compare them and extract one which you are comfortable to repay.
Tips to get approved for a motorcycle loan
Although motorcycle financing works similar to auto loan financing, but this method is not identical to an auto loan approval. Both works on the same basic principle, that means it is approved depending on creditworthiness of borrower, but we could find a large number of lenders who are ready to offer motorcycle loans. The following are a few tips that help in getting approved for a motorcycle loan.
- Firstly understand the key difference between an auto loan and motorcycle loan
- Know your credit worthiness and repayment capability
- Go through different payment plan available
- Identify what perfectly fits you
- Review all the terms and conditions and choose best financing option to buy a motorcycle
Author Bio: The guest post was contributed by Lucy, financial guest blogger from Manchester, UK. Wrote many articles on ppi claims. Find out more about her finance related blogs @financereport.