Are you planning to buy a motorcycle? That’s great; it is less expensive in terms of cost, maintenance and fuel compared to a car. But if you are not planning to pay upfront, motorcycle loans are required.
If it comes with a concern for a bad credit situation, things may sound complicated. Don’t worry, this is the modern age where the lending industry is known to break stereotypes.
Bad credit motorcycle loans is available on certain conditions
Yes, this sounds like good news because at least you have an option. Several lenders offer motorcycle loans for bad credit to purchase a two-wheeler irrespective of credit score status.
But this is tricky if you are trying to approach a bank. Direct lenders offer these loans as their affordability check is not based only on credit score, like traditional lenders.
Let’s understand how the process works when you apply for a bad credit motorcycle loan.
How is loan possible with a bad credit score for motorcycle?
It is possible with the new-aged lending solutions. Gone are the days when credit score was the only criterion to approve or reject the loan application.
Now, online lenders use a new and better approach. They base their approval decision on several other factors.
Affordability factors assessed from last six-month financial records
- Current income
- Income regularity
- Income-expense ratio
- Debt-to-income ratio
- Banking behaviour
- Recent payment record
- Deposit amount
As you can see, there are so many factors that can prove your repayment ability. Then why follow that one suffocating lending rule of approving based on credit score only?
This is certainly a progressive approach. Therefore, when you apply for bad credit motorcycle loans, work on the above financial factors. This makes availing funds easier to purchase your motorcycle.
How much deposit is required when you apply with bad credit?
The deposit percentage varies from 10% to 30%. Usually, in case of a poor credit score, you are expected to pay at least a 20% deposit. But that too, if your current repayment ability is strong.
In case you have weaker credit purchase power, a 25% to 30% deposit may be required. Therefore, always strengthen your creditworthiness before applying. However, it is good to pay a bigger deposit, as that reduces your debt burden.
How to improve creditworthiness to get approval?
You need to focus on improving your recent payment behaviour. This means paying bills and debts on time. Especially in the six months right before you apply for the funds, follow healthy payment behaviour habits.
Your loan provider needs to notice if you are acting financially responsibly or not. Due to a poor credit situation, your credit profile is already risky. Therefore, make sure you convince the finance provider with responsible financial behaviour.
The habit of timely payment of debts and bills is required not only to get a loan. In fact, it is financial advice for you to remain consistent in timely payments of funds.
What are the advantages of applying for bad credit motorcycle loans?
Bad credit borrowing can be expensive due to higher rates as compared to standard loans. But it comes with its own benefits.
- Buy the vehicle – As now you can avail funds despite a poor credit score, you do not need to wait for vehicle purchase. At least you have a way out to make the purchase.
- Fixed monthly payments – The interest rates are typically fixed, and the payments are fixed. Hence, plan repayments easily without facing unpredictable rises in repayments.
- Rebuild credit – This is actually the biggest benefit. Pay customised repayments and improve your credit score as well as loan approval chances.
- Become the owner of the vehicle – Once you pay off the funds on time, you are the owner of the bike. Try to make part payments whenever possible. This improves your credit score as well as owning the vehicle.
How to improve your approval chances?
It can feel tricky to apply with a low credit score. But remove your stress with the tips below.
- Reduce existing debts – You need to strengthen your affordability. Therefore, it is important that you pay off the debts as much as possible. If you cannot pay them off, at least make a part payment.
- Get your name on the electoral roll – It authenticates your identity as a genuine citizen of the nation. Also, it is possible to confirm your identity and address.
- Maintain stable income – Your income regularity is a big reason for any lender to get convinced about your payback ability. Make sure you are earning regularly. Also, your income should show in the bank statement.
- Apply for a realistic amount – Realistic means choosing a bike that suits your budget. This may limit your choices, but if you really want to buy now, it is the smartest way. Also, check the approval chance for a loan amount using the motorcycle loans calculator.
- Provide a bigger deposit – You may not want to compromise with your choice. In that case, provide a bigger deposit amount. As you read above, the maximum is 30%, hence save as per your priority.
- Avoid multiple applications – Due to ignorance, many applicants do the same. When you apply to many lenders, they all perform a detailed credit check. This leaves search footprints on your credit report. Choose one lender, apply and avail funds.
Conclusion
Work on all the calculations of affordability and apply hassle-free. When your application has positive financial factors, approval chances increase considerably. The information should help you apply error-free and get bad credit motorcycle loans on guaranteed approval.
It is good that lending conditions have changed a lot for good. Borrow with bad credit and think of a loan as a chance to improve your credit score.
FAQs
Can I get motorcycle finance if I have a CCJ?
Not all, but some specialist lenders, including Quickloanslender, consider applicants with CCJs. But a detailed affordability check is performed.
Does applying for motorcycle loans affect my credit score?
Yes, it does in both negative and positive senses. Delaying instalments and credit score drops, pay on time and credit score rises.
Can I improve my loan approval chances by applying with a guarantor?
Yes, you can choose to apply with a guarantor. Still, you need to have repayment ability. Also, a clean payment record in the last six months is required
Emma Anderson is a financial advisor at Quickloanslender who always believes in researching hard to know her clients’ financial problems. She takes the time to understand their financial wants and needs to write the blogs on them as the solutions. In her long 14 years of experience, she has written plenty of blogs on the financial and business sectors of the UK.
Emma Anderson has been recognised for her work in financial planning and her blogs are regularly published in the website of Quickloanslender. As far as her educational qualification is concerned, she has done Masters in Accounting and Finance, and done PG Diploma in Creative Writing.
