Bad credit? A motorcycle loan is still within reach

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Ask a Lender
October 19, 2017 | Updated October 20, 2017


Key Points

Steps to financing a motorcycle with bad credit

  1. Take stock of your finances
  2. Improve your credit
  3. Meet all other financial requirements
  4. Save for a large down payment
  5. Consider making higher monthly payments
  6. Use a co-signer or collateral
  7. Compare and negotiate with lenders

A quick internet search will yield dozens of lenders willing to finance motorcycles for those with bad credit. Take these promotions with a grain of salt, however, as the offers may come with some costly surprises.

Lenders always find ways to offset their risks. An offer of no-money-down financing for borrowers with bad credit is sure to carry exorbitant interest rates, shouldering you with a costly loan that could further ding your credit score. With the right preparation, getting a motorcycle loan with bad credit is possible, and if you do it right, you can qualify for bike financing that won’t break the bank.

Finance a bike with bad credit

Follow these steps to set yourself up for a more affordable loan.

  1. Take stock of your finances. Lenders evaluate potential borrowers on more than their credit score alone. If you have poor credit from a past mishap but have a stable, high-paying job and a recent history of responsible spending, you may be able to get a loan fairly easily. If your poor credit is compounded by a high debt-to-income ratio and inconsistent income, financing may be out of the question. Make an honest assessment of your finances and ability to make motorcycle payments, as well as the insurance, gear, fuel and maintenance costs that you’ll need to sustain your bike usage. If you can’t confidently afford these costs, you should not yet purchase a bike.
  2. Improve your credit. The best way to reduce your interest rate and qualify for a motorcycle loan is to work to improve your credit. Use the money you would spend on bike payments to pay off credit cards and other debt. This process takes some time, but patience pays off in the long run for all your credit needs, not just the bike loan.
  3. Meet all other financial requirements. Don’t give lenders any other reason to doubt your ability to repay the loan. Demonstrate a steady income, responsible spending through credit card, rent or utilities payments and a low debt-to-income ratio.
  4. Save for a large down payment. The best option to both offset lender risk while protecting your own finances is to make a large down payment. It isn’t easy, but the more money you have to put forward up front, the more likely a lender will work with you despite a shaky credit history. You also establish some initial equity in the bike, which can help you avoid later owing more than it’s worth.
  5. Consider making higher monthly payments. If you make a large salary but are haunted by poor credit, you may be able to qualify for a loan by offering to make higher monthly payments over a shorter period of time. As long as you can afford to pay more without compromising your essential financial obligations, this can be a good strategy to obtain financing — and reach full ownership sooner.
  6. Use a cosigner or collateral. You may be able to qualify for a motorcycle loan by having someone co-sign on the loan with you, or putting forward personal assets such as a car or home as collateral. These are last-resort options, however. If you default on the loan, you risk harming your relationship with your co-signer. If you default with your house or car on the line, your lender has the right to seize those assets.
  7. Compare and negotiate with lenders. Lenders have varying risk appetites and underwriting guidelines, so compare and get preapproved to see what kind of rates are available to you. In some cases, lenders may be more forgiving you are able to explain your credit situation clearly — for example, if you had an expensive accident or if you are just starting to build your credit and haven’t made any late payments. You may also be able to negotiate better loan conditions by allowing your lender to automatically deduct payments from your bank account.  

What credit score do you need to buy a motorcycle?

Financing a motorcycle already requires stronger credit than other loans. This is because lenders view motorcycles as luxury products, and therefore more likely to be the first payment that a borrower will default on if they run into financial troubles. Many motorcycle lenders will not work with individuals with poor credit at all.

A minimum credit score of 500 to 550 is typically required to qualify for a motorcycle loan. Manage your expectations, however, as even if you qualify, you will be approved for a lower loan amount than someone with prime credit, and you’ll face higher interest rates on top of that. Your objective is to keep these extra costs as low as possible.

Only after you are preapproved and comfortable with all the details of the loan arrangement should you go to the dealership to shop for a motorcycle. Keep improving your credit after you’ve bought the bike, and you may be able to refinance the motorcycle loan in the future at a better interest rate.

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