How to Buy a Motorcycle with Bad Credit

How to Buy a Motorcycle with Bad Credit

You’re finally ready to buy a motorcycle, but there is one thing holding you back. The poor credit decisions you thought you left behind. Bad credit will have a major impact on what financing options are available to you, but don’t be discouraged. You can still find a way to buy a motorcycle, even with bad credit. 

1. Understand Your Finances.

Before you buy a motorcycle, it is important to know what you can afford. That includes how much money you can put down and the maximum monthly payment you can make. Consider your other financial responsibilities and determine how much disposable income you have after paying your bills. You should also know your credit score. There are a ton of free resources online that can determine your credit score, like your mobile banking app and Credit Karma.  

If you go into a meeting with a potential lender with these numbers ready, you can set expectations. Reviewing your finances now will also help you create a budget if you haven’t already. If getting a motorcycle isn’t possible for you right now, your new budget can help you improve your credit so that you can get the motorcycle that you want in the future. 

2. Research Your Loan Options.

If you plan to finance your motorcycle, go into the process knowing that you are at a disadvantage. So, be prepared. Have your credit and banking history on hand. Also provide proof of stable employment. The more credible you can make yourself appear, the better chances you have for approval.

You may come across a few nos, but there may be a lender that is willing to work with you. ChopperExchange lists motorcycles from dealerships all across the US that work with buyers to create financing options that are affordable.

If you don’t qualify for motorcycle financing from a dealer or a third-party lender, then a personal loan may be your best bet. Forbes reports that there are good personal loan options even with an average or low credit score. This option is best for inexpensive motorcycle purchases and should be viewed as a last result. You may not qualify for a large amount because of your bad credit, so you may need to purchase a used motorcycle. Buying a used motorcycle online allows you to make price comparisons and find exactly what you are looking for without settling. 

Don’t take the first loan that is offered to you. Always compare loan options. Be aware of interest rates and payment plans. Having bad credit means that you may have an interest rate that is higher than average, but don’t accept a loan with an interest rate that is double the average rate.You don’t want to get sucked into a loan you can’t pay off in time. This will impact your credit even more. Make sure that you understand the agreement and that rate increases aren’t included in the fine print by reading over every document thoroughly. 

3. Make a Larger Down Payment. 

If you are selling an old motorcycle to make room for a new one, making a larger down payment is a no brainer. Simply use all the money from your old motorcycle to put down on the new one. Putting more money down, means less money owed. Even though you have bad credit, a seller may feel more comfortable making a deal knowing that there are fewer payments and that those payments are within your budget. A larger down payment can also help you lower the interest rate. 

4. Consider a Co-Signer.

If you are unable to get a loan with your credit alone, consider a co-signer. A co-signer is a person who agrees to pay a borrower’s debt if they default on their loan payments. Only take on a co-signer if you know that you will make your payments on time. Making late payments or, worse, deferring payments to your cosigner can greatly impact your relationship with the person. You don’t want to ruin a friendship or relationship with a family member over a motorcycle.  

5. Improve Your Credit Score.

If you are unable to get a loan due to your bad credit and you don’t have the money to buy one outright, your only option is to improve your credit score. According to The Penny Hoarder, a credit score is made up of five factors: payment history, amounts owed, credit history, new credit and credit mix. There are a few things you can do to improve your score: 

  1. Pay all your bills on time each month.  
  2. Pay off as much debt as possible. 
  3. Use your credit card(s) wisely. The Penny Hoarder recommends keeping credit utilization under 30%. 
  4. Raise your credit limit, but still be mindful of how much you spend. 

Buying a motorcycle with bad credit may be challenging, but it is possible. Knowing your options is the first step to making a wise purchase and riding off on your new ride.

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