Looking for a motorcycle, but have bad credit and need a high-risk motorcycle loan? Well don’t worry, the point of this article is to give you everything you need to know to get approved for a subprime motorcycle loan.
First, you need to understand how motorcycle lenders classify you as high risk. On average, when a motorcycle lender seeks to approve any motorcycle financing, they have a much higher limit on the credit score range than a car lender. This exists whether you have good or bad credit.
That said, an auto lender may approve a 610 FICO credit score as not high risk, but a motorcycle lender would likely classify a 610 FICO credit score as a high risk motorcycle loan and may not offer an approval.
There are two reasons for this:
1. Motorcycles are much more difficult to recover in good condition than a car. As a result of this simple fact, if you default on your motorcycle loan, it is a greater risk for a motorcycle lender than it is for a car lender because a motorcycle in good condition is much more difficult to get back than a car.
With all new motorcyclists entering the industry, there is a high incident of some type of minor or major damage to many motorcycles, which translates to a lower amount per unit that a lender gets when they repossess a motorcycle for a customer of their choosing. Get bad credit on your motorcycle loan payment. The damage could come from the repossession agency or the actual owner, but the simple fact is that motorcycles are recovered much less at salvage auctions than cars.
This simple fact is one of the reasons why motorcycle loans with good or bad credit are offered at much higher interest rates than a car and have lower overall approval rates compared to cars.
2. The average motorcycle tends to depreciate very quickly. Since motorcycles have higher accident rates and many people do not pay off their loan once they crash, this translates into higher defaults for motorcycle lenders. This is another reason why motorcycle loan rates are higher and motorcycles are difficult to get approved.
Okay, now that you have a background on how a motorcycle lender views a motorcycle loan, let’s take a look at how you can get approved for a subprime motorcycle loan.
The first step is to really understand your credit report and your credit score. Sure, if you’re looking for high-risk motorcycle financing, you’ve probably had a few credit problems in the past. But you never know how those credit problems developed on your credit report until you get a copy of it.
Take a look and make sure everything reported on your credit report is true. See each year thousands of people as you find that creditors made mistakes on your credit report, which affected your credit score. If your FICO score shows a 610, but there is 1 error on your credit report, you could easily increase your FICO credit score to 625 or higher if you correct the error. Always fix mistakes on your credit report before submitting a subprime motorcycle loan application.
The second step is to clear your credit card debt. I know you’re probably thinking that I can’t do this, but it can make a big difference in helping you get approved for high-risk motorcycle financing. See that motorcycle lenders don’t like their personal credit cards maxed out. Therefore, before submitting your motorcycle financing application, you should try to pay off your credit card debt. Even if you have to do it in the short term, it can go a long way toward getting you approved.
For example, if you have a FICO credit score of 610, you will probably be rejected if you have all your credit cards maxed out. However, if you can reduce your credit card debt by 50%, you have a much higher chance of being approved for a subprime motorcycle loan. This is a simple concept, but you will be amazed at how many motorcycle buyers don’t do it and never get approval.
Step three and the final step is to finally submit your motorcycle loan application. There are many lenders who specialize in subprime motorcycle loans. I recommend linking 2-3 motorcycle lenders online and then moving to local credit unions or dealer-provided financing such as Suzuki Finance, Honda Financing, Kawasaki Credit Card, or Polaris Star Card.