In the United States, about 10.1 million homes own a motorcycle.
If you want to be one of those homes that own a motorcycle, you should start applying for motorcycle loans.
But how do you go through the loan application process? Thankfully, we have some of the best tips out there, so keep reading to find out.
Check Your Credit Score
You can check your credit score by using one of the three free credit report sites. If you’ve already used your free checks, you can buy a check as well. However, don’t check it too often because this can actually lower your score as well.
You need a credit score that is good enough for a credit union or a bank to give you a loan at a decent rate. A good credit score is even more important with this because most lenders are stricter with motorcycle loans rather than cars.
That’s because they see motorcycles as more of a risk, and they can be easily crashed or stolen.
Your credit score should be at least 620. If it’s lower than that, you may not even get a loan. If you do get a loan, you’ll have a lot of high-interest rates.
If you have a low score and you’re not sure why, check over all of the information to see if all of it is accurate. If it’s not, then you might want to get that fraud reported.
If you have a low credit score and there is no fraud on your report, then you might want to spend some time raising the score if you can afford to. You can this by lowering the debt on your credit cards or by just leaving your accounts open for longer.
Consider Interest Rates and Down Payment
When you’re comparing this loan type and lenders, the down payment and the interest rates should be the two things that you watch out for.
The interest rate is normally what lenders advertise to try and draw you in. You should always make sure you read the fine print before you sign anything though.
While a small interest rate in the beginning can sound nice, oftentimes it will skyrocket towards the end of your loan, leaving you paying more for the motorcycle than you should’ve.
The down payment will also affect how long you’re going to have to pay the loan off. You’ll give the lender cash up front, which reduces the amount you’ll have to pay in the long run.
If you have bad credit, you should try and put as big of a down payment that you can. In general, most people put a down payment between 10 to 20% of what the motorcycle costs.
Decide if You Want a New or Used Motorcycle
Newer motorcycles have a larger price tag, but the interest rates are normally lower because lenders don’t find it as risky as a used motorcycle.
That’s because if they break down, they’re usually under warranty and can be repaired.
However, while used vehicles aren’t as expensive, the interest rates are higher because the lender is taking on more of a risk. The motorcycle might not be under warranty anymore, so then if there are maintenance issues, it could really end up costing you.
Start Looking for Lenders
Normally a credit union or a bank will give you a motorcycle loan. You can also get them at the dealership, but you may not get the best rate there.
You should try and look for banks that you already are familiar with. This will make the process easier because they’ll already have the information on file, but they may also have a relationship with you as well.
You can also work with them in person rather than having to try and negotiate all of that online.
Know About Loan Security
Each motorcycle loan provider will also require loan security. With a motorcycle loan, the security is likely the motorcycle that you’re going to buy.
That means if you don’t make your payments or can’t pay it back, then they have the right to take that motorcycle and resell or trade it.
You can get an unsecured loan, but you’ll also have higher interest rates.
Submit an Application
You shouldn’t submit applications to more than three lenders.
If you do that, it’ll be considered a hard inquiry, and that can hurt your credit score. Because of that, it’s not worth it to try for lower rates with everyone.
The paperwork will also be different between each lender, so make sure you read everything carefully. In general, they’ll ask you to send your paycheck stub, proof of where you live, and a driver’s license.
Some lenders will let you submit an application over the phone, but some of them require you to come into the bank and fill out the paperwork there.
Learn More About Applying for Motorcycle Loans
These are only a few things to know about applying for motorcycle loans, but there are many more things to keep in mind.
We know that shopping for any kind of vehicle can be stressful, but we’re here to help you out.
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