Bad Credit Motorcycle Loans: Learn 7 Tips For How to Get Approved For Poor Credit Motorcycle Financing
It is no secret that getting approved for motorcycle financing is based on your credit history and how you dealt with debts in the past. However, all too frequently, credit-worthy people with past financial problems often get turned down for motorcycle financing. Many motorcycle lenders prefer to approve only spotless credit customers and forget about those who need a second chance or who have, unfortunately, lived through a bankruptcy.
For most motorcycle buyers with poor credit, it is an extremely frustrating experience trying to get approved. In the automotive industry, bad credit financing is easily available even if you have a bankruptcy. But, for motorcycles, many banks completely ignore applicants with poor credit.
There are many reasons banks are more lenient with automobiles compared to motorcycles, but none of that really matters. What matters is what you can do today to help you get approved for a bad credit motorcycle loan.
Here are “industry insider” strategies you can use to learn how to get approved for a poor credit motorcycle financing:
1. Communicate with Lenders
Communication with lenders plays a huge role in allowing you to get approved with poor credit. Don’t just assume a lender is going to know your story because your credit bureau is reviewed. You need to look for positive talking points to make lenders understand your past credit problems are truly a thing of the past.
For instance, maybe, you had a major life event like a sick family member who caused you to be late on some of your bills. Discuss it with the lender, and show the lender that, after the situation was resolved, you are now current on all your bills again.
Another helpful tip is to document your income by showing the lender your past two years of tax returns and six months of pay stubs. Most motorcycle buyers do not submit income verification, so it will demonstrate to the lender a lot of initiative on your part.
Lenders like stability, so if you have lived in the same city for many years and have a steady job, make it a talking point. Highlight the fact that you are a stable citizen of the community, and that you have had a steady job for “X” years.
If you are trying to get approved for motorcycle financing after a bankruptcy, make sure you discuss the reasons for the bankruptcy. This is especially true if the bankruptcy was a result of divorce, a business venture failing, or medical bills.
In general, don’t be shy in communicating with lenders. Highlight your strong points and make lenders feel confident that you are on the road to improving your poor credit.
2. Show Lenders You Will Protect Them
For bad credit applicants, there are a variety of ways to gain the confidence of lenders. One great confidence builder is to allow the lender to automatically deduct your monthly payments from a paycheck or bank account. This is also known as an allotment or auto deduction.
Another option is to let lenders know you will take out full coverage insurance, GAP protection, and an extended warranty. All of these items either protect lenders in a total loss situation or help hold up the resale value of your motorcycle.
Lenders highly consider residual values of a motorcycle, because if an account goes into repossession, the lender wants to be able to resell the bike for maximum value. Informing the lender that you will have protection with the above products can go a long way in helping you get approved.
3. Don’t Mass Apply
You might be tempted to submit applications with many different lenders. But lenders see and evaluate all credit inquires on your credit report each time you apply for new credit. Having a lot of credit inquires can hurt your chances of getting approved and even lower your credit score.
Therefore, it is best to submit applications to lenders that only specialize in motorcycles or personal loans that help poor credit applicants.
To help you identify these lenders, ask a lot of questions and review each lender’s advertising. Their advertising should mention subprime, bad credit, poor credit, or after bankruptcy motorcycle financing.
Be careful of payday lenders. These lenders frequently advertise loans for bad credit applicants, but this is not the type of loan you want for a motorcycle. Payday loans are very short-term loans and usually have sky-high interest rates.
Lenders that offer personal loans are a great choice for financing a new or used motorcycle with bad credit. The interest rates on personal loans are normally fair, and the terms can be as long as five years. Furthermore, most personal loan lenders have fast approval and funding, and they are more willing to approve motorcycle loans for poor credit applicants.
4. Find the Right Dealer
Searching for the right motorcycle dealer is important when purchasing your bike. But it can also be important for getting approved for a motorcycle loan with bad credit. Not all dealers are equal when it comes to financing. Some dealers have relationships with specialized lenders that are more willing to finance poor credit.
To find the right dealer, you will have to speak with the finance department. Be upfront and tell the finance manager your credit score and credit history. Even bring your credit report. Without submitting an application, a good finance manager can give you a pretty good idea if you have a chance of getting approved.
5. Co-Signer and Trade-Ins Help
Poor credit motorcycle loans do not always require a co-signer. However, informing lenders that you have a co-signer can go a long way in helping you get approved with bad credit.
Furthermore, trade-ins are highly important, especially, if you made payments on time with your trade-in bike. In the past, you may have had some problems with other bills. But if you can show the lender that, on your past motorcycle loan, you made all the payments on time it can be a big help with getting approved.
6. Reduce Maxed-Out Credit Cards
Most motorcycle lenders consider maxed-out credit cards negatively in the approval process. Therefore, if you have a maxed-out Visa, MasterCard, or other credit cards, it is highly important to reduce these cards by at least 30 percent. This will help boost your credit score and help you get accepted for a bad credit motorcycle loan.
7. Know Your Credit
It is definitely no secret that thousands of people per year find errors on their credit reports. If you have bad credit, it means creditors have reported negative items against you. However, that does not mean creditors have not made mistakes. For instance, what if a creditor reported that you were six months late on a bill, yet you can prove that you were only thirty days late? If you do not challenge it, then it will count against your FICO credit score.
It is very important to check your credit report for errors. One error can lower your FICO score many points, and this could mean the difference between getting approved or declined for a bad credit motorcycle loan.
It is without question more difficult to get approved for poor credit motorcycle financing. But the key to guaranteed approval is to find the right specialized lenders and not get frustrated. Simply remain persistent and communicate with lenders about your situation.