Have you always dreamed of riding a powerful motorcycle on an open road? There is nothing more relaxing for motorcyclists than feeling the wind caress their hair while the sun rays touch their face.
Not many individuals are capable of experiencing their long-desired motorcycling adventures due to the lack of finances to purchase a motorbike. However, nowadays, most lenders offer motorcycle loans to clients, backed up with collateral.
In most cases, the motorbikes themselves serve as collateral in the event of not paying for the monthly installments on time. Some alternative moneylenders even provide individuals with unsecured loans at the cost of having high-interest rates.
The following tips will help you get a favorable credit for purchasing the motorcycle you’ve always dreamed of.
Check your credit score
The initial step of your journey towards applying for a motorcycle loan is checking your credit score, which is of essential importance to lenders. Your FICO score can be checked in multiple ways but turning to your credit card provider or a credit reporting agency is believed to be the wisest solution. Unless you’re considered creditworthy by banks and credit unions, the likelihood of getting a favorable motorcycle loan is close to none.
In terms of lending criteria, moneylenders impose much stricter requirements than the ones for auto loans, as motorbikes are more likely to get stolen or damaged. Keep in mind that your credit score is supposed to be a minimum of 620 points for banks to think of you as an eligible candidate. Consequently, all five factors of the FICO scoring model need to be favorable for borrowers to hope for credit with beneficial interest rates.
Therefore, make sure you work on improving your score prior to applying for a motorcycle loan. For instance, it’s essential to pay off all of your high debts to improve your debt-to-income ratio, as well as all of your non-debt obligations. Refrain from applying for multiple loans simultaneously, as this affects your FICO score negatively.
Look for lenders
After checking and making improvements to your credit score, it’s time to look for suitable lenders. Traditional lenders, such as banks and credit unions, are believed to provide the most favorable interest rates on a mc-lån as long as borrowers have a solid credit score. Therefore, you are encouraged to apply for a credit in the bank that you already collaborate with. These professionals are familiar with your file and might consider you more eligible in comparison with individuals who aren’t their clients.
Nevertheless, you are strongly advised to submit applications to a few lenders but make sure they aren’t more than three. Bear in mind that the more loan applications you submit the lower your credit score. Since the FICO score is of tremendous importance, there’s no reason to reduce your points by submitting applications to a myriad of lenders.
Regarding paperwork, each bank and credit union imposes different requirements to applicants that you are supposed to learn prior to submitting an application form. In most cases, these institutions require borrowers to provide ID proof, address proof, valid driving license, salary slips from the last three months, as well as a bank statement that covers the same 3-month timeframe.
In addition, some banks provide applicants with the opportunity to apply for a motorcycle loan online, while others invite them for a face-to-face interview in a brick-and-mortar location. Before submitting the application, you are expected to go thought the loan options of each bank. Should you have any inquiries about the terms, don’t hesitate to get in touch with the lenders for further explanation of the interest rates and other specifics.
Once each lender provides you with an offer, you are supposed to compare the offers by inspecting their interest rates and loan term. The most suitable offer would be the one providing you with the lowest rates over a long time period. Visit this page to learn how banks set interest rates on credits.
Consider financing your loan with a motorcycle dealer
Individuals who lack a good credit score have no other alternative but obtain the required financing through a motorcycle dealer. Most of these dealers offer such financing to potential clients but not all of them are fond of assisting people with low credit scores.
Therefore, it’s vital to have a conversation with one of the dealer’s finance department representatives in order to assess the likelihood of getting the loan your need. However, you are supposed to be absolutely frank about your unfavorable FICO score, as it’s the only way for these professionals to assess your chances of getting financed for purchasing a motorbike.
Look for alternative lenders
In case you can’t finance a motorcycle with a dealer, the following step is looking for alternative lenders that aren’t discouraged by poor credit scores. The most effective method of searching for such alternatives is by conducting online research on lenders that specialize in motorcycle loans and provide offers to individuals with bad or no credit score.
Nevertheless, accepting such an offer means paying much higher interest rates than the ones provided by banks and unions. It’s the price you have to pay for being ineligible in the eyes of traditional lenders.
Consider other ways of increasing your loan chances
Finding a co-signer is another way of persuading lenders to approve the applications of people that don’t meet their eligibility criteria. In order for this plan to work, the co-signer is expected to have an excellent FICO score, which serves as a guarantee that he/she will take on the monthly payments whenever you fail to pay them on time.
Moreover, making a large down payment is yet another method of becoming more reliable to lenders. Paying a large amount of money as a deposit speaks volumes about your seriousness regarding the investment.
You’ll no longer have to imagine the wind caressing your face.
Hit the road with your new motorbike to finally feel the wind for real!