Buying a motorcycle is a big-ticket purchase, as some motorbikes come with price tags that are almost the same as a 4-seater conventional sedan. So, in situations where the cost of a motorcycle seems unaffordable, getting some financing can help. But if one has a low credit score, getting loans can be difficult, especially when down payments are involved. At times like these, one can consider motorcycle financing options without a down payment.
How bad credit motorcycle loans and no down payment loans work
Customers with a good credit score typically receive loans because it indicates that they will be able to repay the amount and interest rates on time. For those with poor or bad credit, such conventional loans are generally not available. However, there are some lenders willing to provide loans with bad credit. The loan terms and interest rates in these cases are quite different from what’s offered to those with good credit scores. Further, instead of credit scores, these lenders look at other aspects, such as employment stability and income levels.
Generally, most loans require a borrower to make a down payment before the loan is disbursed. The down payment often comprises at least 10% of the total loan and has to be paid upfront. But some lenders do away with this requirement. Instead, they set up shorter repayment cycles, such as biweekly or bimonthly repayments.
Motorcycle financing options with bad credit and no down payment
When looking for motorcycle financing with a low credit score, one can directly approach traditional financial institutions like banks. That said, most banks require a good credit score. So, when wondering how to get a motorcycle loan with poor credit, one can explore other options.
Credit unions
According to the National Credit Union Administration, or NCUA, a number of credit unions offer lower annual percentage rates (APRs) on their loans, including motorcycle financing. Since credit unions are generally nonprofit, they are often willing to offer loans to those with bad credit scores. So, even if there are down payments involved, those with a 550 credit score too can get a motorcycle loan. All one needs to do is pay a nominal fee to join the union.
Online lenders
When looking for no-credit check motorcycle financing options, considering online lenders is a good idea. There are many lenders, such as peer-to-peer lending institutions, that one can easily apply to. Since they do not have overhead costs like traditional brick-and-mortar lenders, they are able to pass on the savings to customers through low interest rates, no credit checks, or no down payments.
Personal loan
Instead of applying for motorcycle financing with a low credit score, it is easier to get a personal loan with bad credit. With personal loans, no down payments are involved, like in the case of motorcycle financing loans. That said, personal finance may incur higher interest rates and additional fees since these are unsecured loans. Some personal loan lenders may also charge origination fees based on the loan amount borrowed. When thinking about how to get a motorcycle loan with no credit and no cosigner, applying for a personal loan through a bank is a good option.
Dealership financing
Often, motorcycle dealerships collaborate with networks of lenders to offer loans to customers. Buying a motorcycle from dealerships like these can be useful in finding loans with poor credit scores. Besides, a local dealership is generally the best place to find bad-credit motorcycle loans with guaranteed approval nearby. Dealers involved in the sale of high-end motorcycles generally offer these types of loans.
Manufacturer financing
Sometimes, top motorcycle manufacturers offer financing options with special APRs and loan terms. These are good options for those looking for motorcycle financing with low credit scores. Such loans are usually offered by manufacturers that also have financial services developed specially for their customers.
Buy here, pay here
This option involves getting financial assistance directly in-house from the dealership from which the motorcycle is being purchased. As part of the buy-here, pay-here deal, a customer has to sign a lease agreement directly with the dealership without any third party involved. The dealership sets its own terms and interest rates, which are higher than conventional loans. Such motorcycle loans are generally offered to those with bad or no credit.
Things to do when motorcycle financing without a down payment is inaccessible
Sometimes, it is difficult to get financing options, even from lenders offering bad credit loans or loans without a down payment. In such situations, one can take certain measures to purchase the motorcycle.
Purchase a used motorcycle with cash
If there is enough cash in hand, one can consider purchasing a used motorcycle instead of a brand-new one. On average, a pre-owned bike costs around $3000. By paying with cash, it is easy to avoid down payments, interest, and other fees.
Improve the credit score
Another option is to hold off the purchase of the motorcycle and work on improving the credit score. Ensure to check the credit report and dispute any discrepancies. Along with this, make sure to pay off as many bills as possible to bump up the credit score. Even a slight increase in the credit score can increase the chances of getting a motorcycle loan.
Get a cosigner
Making someone with a good credit score a cosigner is an easy way to get a loan. But it means the cosigner will be legally responsible if the primary borrower is unable to repay the loan. Further, delays in payment will negatively impact the credit score of the borrower and the cosigner.