Are you in the market for a motorcycle, but have bad credit and need a high risk motorcycle loan? Well don’t worry the goal of this article is provide you everything you need to know about getting approved for a high risk motorcycle loan.
First you must understand how motorcycle lenders go about classifying you as high risk. On the average, when a motorcycle lender is looking to approve any motorcycle financing they have a much higher cut off in the credit score range than an auto lender. This exists whether you have good or bad credit.
So with that said an auto lender may approve a FICO credit score of 610 as not a high risk, but a motorcycle lender would most likely classify a FICO credit score of 610 as a high risk motorcycle loan and may not offer an approval on it.
There are two reasons for this:
1. Motorcycles are much harder to repossess in good condition than an automobile. As a result of this simple fact, if you default on your motorcycle loan it is a higher risk to the motorcycle lender than an automobile lender because it is much harder to repossess a motorcycle in good condition than a car.
With all the new motorcycle riders entering the industry there is a high incident of some form of minor or major damage on many motorcycles, which translates in to a lower amount per unit a lender gets when they repossess a motorcycle for a customer that chooses to get bad credit over paying for their motorcycle loan. The damage could be from the repossession agency or the actual owner but the simple fact is motorcycle fetch much less at repossession auctions than automobiles.
This simple fact is one reason good and poor credit motorcycle loans are offered at much higher interest rates than a car and has an overall lower approval percentages when compared with cars.
2. The average motorcycle tends to depreciate very fast. Since motorcycles have higher accident rates and there are many people who once they crash do not pay off their loan, this results in higher defaults for motorcycle lenders. This is another reason motorcycle loan rates are higher and motorcycles are hard to get approved for.
Ok, now that you have a background in how a motorcycle lender views a motorcycle loan, let’s look at how you can get approved for a high risk motorcycle loan.
Step one is to really understand your credit report and credit score. Sure if you are looking for high risk motorcycle financing, you probably have had some credit issues in the past. But you never know how those credit issues played out on your credit report until you get a copy of it.
Take a look and make sure everything reported on your credit report is actually true. See every year 1000s of people just like you find creditors made errors on their credit report, which negativity impacted their credit score. If your FICO score shows a 610, but there is 1 error on your credit report you could easily raise your FICO credit score to 625 or higher by getting the error fixed. Always get errors fixed on your credit report before you submit a high risk motorcycle loan application.
Step two is to clean up your credit card debt. I know you are probably thinking I can not do this, but it can make a huge difference in helping you get approved for high risk motorcycle financing. See motorcycle lenders do not like to see your personal credit cards maxed out. Therefore, before you submit your application for motorcycle financing you should try to pay down your credit card debt. Even if you have to do it for the short term it can help you tremendously with getting approved.
For instance, if you have a 610 FICO credit score you will probably be declined if you have all your credit cards maxed out. However, if you are able reduce your credit card debt by 50% you stand a much better chance of getting approved for a high risk motorcycle loan. This is a simple concept but you will be surprised by how many motorcycle buyers fail to do this and never get approved.
Step three and the final step is too finally submit your motorcycle loan application. There are many lenders that specialize in high risk motorcycle loans. I recommend tying about 2 or 3 online motorcycle lenders and then move to your local credit unions or financing provide by the dealership such as Suzuki Finance, Honda Financing, Kawasaki Credit Card or the Polaris Star Card.